Investment in mutual funds is happening a lot these days. You will find people telling you many benefits of investing in it. However, no one talks about its risks. Even in the advertisement of mutual funds shown on TV, mutual funds are first praised and then it is quickly told that investment in mutual funds is subject to risks. However, after this comes a tag line, which says 'Mutual funds are right'. Now mutual funds have been surrounded by controversies regarding this. 

In fact, a PIL has been filed in the Bombay High Court by a chartered accountant objecting to the promotion of mutual funds. The petitioner has sought directions to SEBI (Securities and Exchange Board of India) to take necessary steps to stop "deceptive" and "misleading" advertising campaigns by the Association of Mutual Funds in India (AMFI).

allegations on advertisements

According to a Business Standard report, the petitioner has alleged that AMFI is promoting 'Mutual Funds Sahi Hai' "without any solid basis and logic". "AMFI's advertising campaigns only highlight the positive aspects of mutual funds without mentioning their limitations and risks. These campaigns are completely baseless, deceptive and misleading," the petition states.

The petitioner further said that these advertising campaigns do not contain any element of investor education or awareness. Instead, these are created for commercial purposes, which are only for the benefit of AMFI members and ignore the interests of investors.

Comparison with advertisements of other organizations

The petitioner compared AMFI's advertisements with the advertisements issued by the Reserve Bank of India (RBI), National Stock Exchange (NSE) and SEBI itself. The petition states that these organizations do not have any commercial motive in their advertisements and their sole purpose is to serve the public interest. On the other hand, AMFI's advertisements are of commercial nature and are made only to benefit mutual fund companies.

High Court action

On December 18, the High Court appointed an amicus curiae (court friend) considering the seriousness of the matter and issued notice to SEBI and AMFI seeking their response. The court has taken this step keeping in mind the involvement of public interest in this issue.

The petitioner's demand

The petitioner has demanded that these advertisements of AMFI be stopped immediately and the permission given to them by SEBI should be revoked. The petition also states that AMFI should be forced to give correct and complete information to investors, which includes both the benefits and risks of mutual funds.

Investor protection issue

It has been argued in the petition that investors are being misled through these advertisements, which is against their interests. Keeping investors unaware of the risks by giving one-sided information in such campaigns is morally wrong and harmful to the safety of investors. Let us tell you, during the next hearing in this case, SEBI and AMFI will have to clarify their position.