With a view to safeguard the interest of genuine investors, SEBI may soon frame a stringent set of rules for funds invested in art works, antiques, coins and stamps, to check black money flow into these products
Fearing flow of illicit wealth into these funds and also a high level of risk posed by them to the general investors, Sebi is now considering framing a specific set of regulations for these funds, a senior official said.
Sebi will soon begin a consultation process with various stakeholders, including the central government and RBI, with an aim to frame the specific regulations for these alternative investment vehicles this fiscal, the official added.
Globally, Art funds are very famous as an alternative class of investments for rich investors and have started gaining some ground in India over the past few years.
Earlier in 2008, a time when the art funds first became visible in India, SEBI had issued a public notice to warn the investors against putting their money into art funds or schemes of entities not registered with Sebi.
Sebi considers investment funds focussed on art works, antiques, coins and stamps as “Collective Investment Schemes”, which come under the ambit of the capital market regulator. However, there are no specific regulations in India for art and other such funds, which collect money from numerous investors, most of whom are high-net worth individuals to invest them into art works, antique pieces as also old and rare coins and stamps.
At that time, Sebi had said that its analysis of various art funds has found them to be ‘collective investment schemes’ and were being launched by various entities without registering with Sebi in accordance with the SEBI (Collective Investment Schemes) Regulations, 1999. As per the existing regulations, only an entity registered with Sebi as a Collective Investment Management Company is allowed to offer any collective investment fund or scheme, including those focussed on art works.
Globally, alternative investment avenues are quite in vogue among rich investors, who are estimated to allocate 5-10 per cent of their investment portfolio into these products.