The circular on skin in the game, while a good idea in spirit, is going to be extremely problematic in implementation.

This circular applies to not just senior employees but junior research staff, dealers, and support function heads. These people don’t earn the kind of money CEOs and CIOs do.

It is forcing them to lock 20pc of their income for 3 years. It mandates how much one saves. For a guy earning 15-20L, imagine how difficult it is to put away 3-4L. We are constraining employee cash flows.

Circular suggests we have to invest in all schemes basis weighted AUM. So if I run a 80-20 debt equity business that is my forced asset allocation. For a mid cap FM he has to invest in his schemes or a higher risk grade.

Just because I run a mid cap fund doesn’t mean this is my risk appetite! And a liquid fund manager has to park money in liquid for 3 years.

For a CEO or sales head, I have to invest in every scheme of my AMC? Every single scheme? That’s going to be very difficult.

This rule doesn’t apply to employees of banks, insurance companies and other financial institutions. Why these rules for one industry?

Implication is either we will be forced to pay everyone 20pc more hitting the business and cost structure. Or a lot of people won’t work for an MF. Why should a marketing head or CTO deal with this? They don’t even make investment decisions.

This is hard to implement. Comp varies hugely basis the year and bonus outlook. How can you make these decisions at the beginning of the year?

If we wanted to build skin in the game a simple rule would do it: for people earning more than 50 lakhs, 50 (or some percent) of your investments (not assets) should be in your own funds. Finished.

By the way, 70% of my investments are @EdelweissMF. My CIOs, FMs, sales head, and product head also invest meaningfully in our funds. We needed no internal policy or regulation to do this. We love our products, trust our people. It’s called soul in the game. @itsdeepakjain