The Securities and Change Board of India (SEBI) has proposed a whole revamp of its mutual funds laws geared toward simplifying the almost three-decade-old framework, eradicating redundant provisions and bettering investor safety.
The mutual fund rulebook has grow to be “voluminous and complicated” after years of piecemeal amendments, and so “SEBI has undertaken an train to comprehensively evaluation the MF Rules” to make them simpler to grasp and implement, it mentioned in a draft paper on Tuesday.
The revised framework proposes sweeping modifications throughout governance, compliance, disclosure and value buildings. This consists of the elimination of the extra 5 foundation factors (bps) expense that asset administration corporations (AMCs) have been allowed to cost on schemes with exit masses.
To offset the influence, SEBI has marginally revised the bottom expense ratio slabs upward by 5 bps for open-ended schemes.
The regulator has additionally proposed reducing the brokerage cap from 12 bps to 2 bps for money transactions and from 5 bps to 1 bps for derivatives, citing the necessity to forestall buyers from successfully paying twice for analysis companies bundled with buying and selling commissions.
All statutory levies corresponding to GST, stamp obligation and securities transaction tax will now be stored outdoors the entire expense ratio (TER) restrict, bringing higher transparency to charge disclosures.
For ease of compliance, mutual funds will now not be required to submit onerous copies of commercials to SEBI or publish sure notices in newspapers. Communication with buyers might be accomplished digitally, whereas half-yearly portfolio disclosures will likely be merged with month-to-month studies to keep away from duplication.
Amongst structural modifications, SEBI has clarified the eligibility norms for sponsors and trustees, deleted redundant classes corresponding to capital protection-oriented and actual property mutual fund schemes, and proposed clearer definitions for phrases like TER and “unbiased trustees.”
Asset-management corporations providing non-pooled or non-broad-based funds ought to achieve this by means of a separate enterprise unit, with all key staff segregated and a board-level oversight to manage conflicts, it mentioned.
The regulator has invited public feedback on the draft laws by November 17.
Printed on October 28, 2025
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