"No Need For Regulator To Intervene," Says Madhabi Buch On Mid, Small Cap Stocks Slump

Securities and Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch said the regulator will not comment on the recent fall in mid-and small-cap stocks.

She made this statement while speaking at an event organised by the Association of Mutual Funds in India (AMFI) in Mumbai on Friday. Buch referred to her earlier warnings given in March 2024, where she had expressed concerns about possible bubbles in these market segments.

Buch launched three key initiatives at the AMFI event: Chhoti SIP, Tarun Yojana, and MITRA. These initiatives aim to increase financial inclusion, encourage young people to invest, and help investors recover forgotten mutual fund investments.

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Buch also stated that India’s mutual fund industry is mature enough to make independent decisions about micro-SIPs. She added that the industry knows how to ensure suitable and sustainable products for new investors.

Regarding thematic mutual fund schemes, Buch spoke about their growth due to the lack of limits and regulatory arbitrage. She highlighted SEBI‘s new rule requiring asset managers to deploy funds within 30 days of a new fund offer launch to curb excessive fund launches.

On distributor malpractices, Buch stressed accountability, stating that SEBI will hold asset management companies responsible for any wrongdoing.

She also reiterated that promotional incentives like Swiggy Money linked to SIP completions are not allowed to assure returns.

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The Tarun Yojana initiative aims to promote financial literacy among school students by training teachers as financial ambassadors.

Top-performing students will receive SIP investments of ₹100 per month for 24 months. The initiative will be piloted across nine districts before a nationwide rollout.

The MITRA initiative will help investors recover unclaimed or forgotten mutual fund holdings. It provides a centralised database for inactive and unclaimed mutual fund folios, enabling investors to track forgotten investments and update their KYC details.

She also said that SEBI had already made its statement when necessary and doesn’t feel the need to add anything further. This stance comes amidst a sharp sell-off in mid-and small-cap segments, which had previously outperformed large-caps for most of FY24.