THE Securities and Exchange Board of India (Sebi) has blocked 20-25 new fund offerings (NFOs) as they carry features similar to those in the existing schemes offered by the same mutual fund houses, officials familiar with the matter said.

Reliance MF, ICICI Prudential MF, IDFC MF, Tata MF, SBI MF and Baroda Pioneer MF are among fund houses whose NFO applications filed 6-12 months back have not yet received Sebi approval because of this reason, officials said.

The market watchdog does not provide processing status of NFO applications on its website. An e-mail query sent to Sebi remained unanswered. However, Financial Chronicle confirmed this development with heads of three mutual fund houses, who spoke on condition of anonymity.

“Sebi is telling fund houses that the new schemes should be distinct from earlier ones,” said head of a bank-sponsored mutual fund house, whose 3-4 schemes are yet to receive regulator’s approval.

“The message from the market regulator is clear. Don’t launch new funds just for the heck of it,” said head of another mutual fund house.

As per the data available from Delhi-based Value Research, out of about 60 equity NFO applications filed with Sebi in the past one year, only 12 schemes have been launched.

Officials said more than half of these applications are still pending with the market regulator.

“Sebi is doing the right thing by not allowing multiple schemes having similar features,” said Aditya Agarwal, country head of Morningstar India, a mutual fund tracking firm.

“These schemes complicate the overall offering of a fund house and make it difficult for the investors to choose the right product,” he added.

Interestingly, Sebi is clearing NFO applications from relatively new fund houses or those who don’t have too many existing schemes in their bouquet. For example, in the past three months, Axis MF launched two new equity funds – Axis Equity Fund and Axis Tax Saver. The fund house got Sebi’s permission to start the business in September 2009.

Sebi’s displeasure for NFOs having similar features like the existing schemes is not new. In fact, the previous chairman, M Damodaran had publicly said that there was no need for fund houses to come out with NFOs, which are existing schemes in a new avatar. But, now the market regulator has gone one step ahead and is not allowing this practice.