But with the industry resisting such moves, Sebi has been forced to come out with the proposed set of rules. “Mutual funds have not responded to Sebi’s persuasion for years. “At some stage, bigger schemes will have to bring down their expense ratio. This will impact their profitability,” he said.The government, in the previous two annual Budget announcements, had paved the way for mutual-fund scheme mergers by removing tax anomalies.Earlier, mutual fund investors were deemed new subscribers for taxation purposes if a scheme merged with another. A top mutual fund official said consolidation of schemes will bring a ‘level-playing field’ in the industry.“Hopefully, now Sebi will give permission to mutual funds to launch schemes that they do not have,” the chief executive of a mutual fund said, requesting anonymity

Source: Economic Times August 27, 2017 19:18 UTC