NEW DELHI: Nearly two dozen firms awaiting Sebi nod for setting up mutual funds now seem to have had a change of mind and they are dilly-dallying on the matter. Many of these applicants had to furnish more information, but they are delaying getting back.

Industry players blame the low margins and tough rules for turning the once-lucrative mutual funds business into sour grapes, wherein existing players are contemplating selling out and applicants no more being keen on securing approvals.

There are about three dozen fund houses operating in the country, but business has come under pressure in recent months, with June alone seeing a 16% dip in total assets under management. Besides, there are about a dozen more entities registered with Securities and Exchange Board of India (Sebi).

On top of it, as many as 24 applications are pending with Sebi for entering this businesses, but the processing status data available with Sebi indicate lack of interest from most of those who had earlier announced mega plans to enter the business.

Out of these applications, 18 have been asked to furnish further information and such pending applications date way back to 2006.

“The corporate houses are shying away from entering the asset management business as they are finding them less attractive with Sebi now turning its focus to making it investor friendly,” a senior industry official said.

Entities seeking approval from Sebi include Jaypee Capital Services, ASK Investment Holdings, Prime Securities, Karvy Stock Broking, Unicon Securities, Mahindra & Mahindra Financial Services, First Global Stockbroking, Bajaj FinServ-Allianz Global Investors, Enam Asset Management and Parag Parikh Financial Services.

Besides, HDIL Constructions and Kumar Housing are seeking nod to set up real estate MFs for about a year now. Out of these applications, only one (Parag Parikh Financial Services) was filed this year and the remaining were submitted with Sebi between 2006 and 2009.

Industry sources said that many potential entrants are putting their entry plans on the back burner and even some existing players are developing a cold feet, presumably because of falling margins and tough regulations.

Compounding their woes is the fact that those looking to exit are unable to find buyers at the price sought by them.