We would like to bring to your kind attention a recent decision by SEBI to abolish all Entry Loads in all mutual fund schemes. Sebi had early invited suggestions from various stake holders of the mutual fund industry regarding change in entry load/payment of commission to distributors. Representation given by mutual funds (Asset Management Companies) & distribution channel partners had suggested to SEBI to consider introduction of variable load as it is not practical for distributors to get directly paid by investor. It seems SEBI has totally ignored the suggestion and has proposed that distributors should directly negotiate their fee with investors which is rather unfortunate. Also, as per our understanding this is completely at variance from the practice followed by the Mutual Fund Industry worldwide. Now lets understand what implications the steps proposed by SEBI will have: 1) Since earlier distributor commission were paid by mutual fund (AMC) after deducting service tax there will be a significant loss of service tax revenue to the Govt. Of India. 2) The primary job of an investment advisor is to advise his client and offer them the best product as per the investor's needs and risk profile. In case the new SEBI rule comes in we may find investors and advisors spending more time negotiating the fee rather than discussing about the performance and nature of investments. 3)The SEBI proposal would also lead to some of the following problems: a)It will unnecessarily increase the accounting paper work tremendously which smaller independent financial advisors will find difficult to handle. b)This may also lead to a strain in investor advisor relationship because now the advisor will want a fee for every job which he/she does for investor. Since in the present system the distributor was being paid by the mutual fund it had no direct impact on the investor and the distributor often used to provide many services free of cost. c)Most investors will be very reluctant to pay any fees at all to the distributor and hence he would be expected to work free of cost. 4)The growth in the mutual fund industry has largely been driven by the efforts made by the distribution community at large. These people have spent a lot of time and money in educating clients and help them develop a faith in mutual fund over the last few yearsafter a not so good period in the 90s and early 2000 period. It would be grossly unfair to now tell distributors that all their hard work will not benefit them any longer. 5)The process of distributing mutual fund in India is not the same as it is in other developed countries. The difference primarily is in areas relating to use of technology, education level of investor , investment and redemption pattern of investor. In use of technology we are still outdated as there is no common electronic platform where any investor or distributor can get a transaction done on the internet directly. The education level of the investment community at large is still developing as is borne out by the fact that most investments come in a rising market and redemptions come in a falling market.In the developed world people look at 10 to 20 years returns while choosing an investment while here it is barely a year or two. 6) Keeping all the above points in view it is requested that SEBI may be asked to relook at the whole entry load structure including direct investments and ensure that it comes out with a structure which is fair to all stake holders i.e. investors, AMCs and distributors as the livelihood of over 50 lakh people is at stake across Banks, AMCs, Distributors, IFAs, Sub brokers etc. Your urgent action in this matter is requested. KINDLY PUT YOUR ARN WITH NAME IF YOU ARE A DISTRIBUTOR. PLEASE DO NOT SIGN AS ANONYMOUS AS IT DEFEATS THE PURPOSE OF THE PETITION.ANONYMOUS SIGNATURES WILL BE REMOVED.THANKS.

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