Capital market regulator, Sebi, is set to stop early or premature withdrawals by investors in Fixed Maturity Plans (FMPs) to be launched from now on.
The recent rush by large corporate investors in FMPs to redeem their investments, which resulted in considerable pressure on fund houses, has forced Sebi to review its norms relating to this product. The regulator has decided not to allow early withdrawals in new FMP offerings and to make it mandatory for new FMPs to be listed on exchanges, according to a person familiar with the issue. The aim is to prevent large scale premature redemption in a product, which is marketed as a fixed maturity plan.
Over the course of the past 12 months, FMPs had emerged as one of the most popular products offered by fund houses. Where it scored over fixed deposits was in terms of higher yields and post-tax returns, which helped draw in a lot of corporate money
