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Informist, Tuesday, Oct. 28, 2025

 

--SEBI releases consultation paper on comprehensive review of MF regulations 

--SEBI seeks feedback on MF regulation consultation paper by Nov 17 

 

MUMBAI – The Securities and Exchange Board of India Tuesday issued a consultation paper proposing a complete overhaul of the mutual fund regulations. The move aims to simplify the 29-year-old regulatory framework, reduce compliance burden, and strengthen investor protection, the regulator said. SEBI has sought comments on the consultation paper by Nov. 17, 2025. 

Key Proposals in the consultation paper include simplifying eligibility criteria for mutual fund sponsors and their registration and standardising the roles and responsibilities of trustees and asset management companies. The regulator has also proposed that mutual funds send their annual reports and summaries digitally.

Hereon, prudential investment limits and valuation norms will be consolidated within SEBI's Master Circular for easier reference. SEBI has also proposed removing the additional 5-basis-point expense charge permitted for mutual funds to rationalise costs for investors. It has also proposed to revise the expense ratio slabs and remove statutory levies, such as the goods and services tax and stamp duty, from the total expense ratio limits. 

 

It has proposed reducing brokerage and transaction costs to 2 bps from 12 bps for cash transactions and to 1 bp from 5 bps for derivatives to prevent investors from being charged twice for research-related costs, SEBI said. 

 

SEBI has also proposed to simplify portfolio disclosure norms to avoid duplication. It has proposed reducing the minimum number of trustee meetings from six to four per year and replacing newspaper notices with digital disclosures.

 

SEBI has asked stakeholders and investors for comments on whether the three-tier structure of sponsor–trustee–asset management company needs revision, along with eligibility and governance norms for the companies and key managerial personnel. The paper also sought comments on whether the current registration framework should be shifted to focus on asset management companies instead of mutual funds.

 

The review follows industry feedback collected through the Association of Mutual Funds in India and internal deliberations within SEBI. The mutual fund industry's assets under management have grown to INR 75.61 trillion as of September end, with more than 250 million investor accounts, prompting a need to modernise the existing rules, SEBI said.  End

 

Reported by Kabir Sharma

Edited by Saji George Titus

 

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