LIC bosses to meet SEBI over approval delays

HYDERABAD: Top brass of India’s largest insurer Life Insurance Corp (LIC) will meet the market regulator Securities Exchange Board of India (Sebi) to iron out issues of delays in clearing new schemes and merging certain existing schemes of its asset management arm LIC Nomura Mutual Fund. A team of LIC Nomura MF led by LIC chairman DK Mehrotra is scheduled to meet Sebi chairman UK Sinha on Thursday to air their anguish and seek early approvals.

“LIC Nomura MF was for over a year waiting for the regulator’s approval to merge four of its poorly-performing MF schemes into another better-performing scheme,” a person with direct knowledge of the development said.

The AMC is also awaiting the regulator’s nod for 14 fixed maturity plans (FMPs), through which it plans to raise around Rs 2,000 crore. The Indo-Japanese JV, which now manages around Rs 7,000 crore worth of AUM had sought Sebi’s approval to merge its four underperforming equity schemes with around Rs 320 crore AUM with another scheme.

The AMC feels the combined scheme, with an AUM of over Rs 600 crore, will make it attractive for the fund manager to drive the fund, apart from enabling him churn the portfolio at frequent intervals.

“In a change from its earlier stand, Sebi now wants the AMCs to seek ‘positive consent’ from all their MF holders for such merger of schemes, while the LIC arm wants the regulator to allow it to follow the earlier practice of seeking ‘negative consent’ from the MF holders,” said the same person quoted above.

In the new ‘positive consent’ practice, an AMC has to obtain the willingness of all its customers under those schemes for such a merger in writing. As against this, the earlier practice of ‘negative consent’ allowed an AMC to go ahead with merger of schemes for all those customers who did not respond negatively within a specified period. LIC Nomura MF has a total of 3.5 lakh customers under a total of 31 schemes, while the four schemes under review together have over one lakh customers.

“The AMC fears the possibility of losing majority out of the one lakh customers if Sebi insists on seeking positive consent from all of them within the specified period,” he said. LIC Nomura MF had in last November sought approval for merger of four schemes – Top 100 Fund, Systematic Asset Allocation Fund, India Vision Fund and Opportunities Fund – with Equity Top 200 Fund.