India: SEBI’s Review of Mutual Fund Regulations – October 2025
India’s mutual fund industry has grown exponentially, from ₹6,700 crore in 1988 to ₹75.6 lakh crore in 2025. This remarkable journey of innovation, scale, and investor trust now calls for a modern, simplified, and investor-first regulatory framework.
To meet this need, the Securities and Exchange Board of India (SEBI) has launched a comprehensive review of the Mutual Fund Regulations (1996). The proposed reforms aim to enhance governance, improve transparency, and empower asset management companies (AMCs) to innovate responsibly, while aligning India’s regulatory landscape with global best practices.
SEBI’s Mutual Fund Regulation Review 2025 – What’s Changing
| Theme | Before (1996–2024) | After (2025 Proposal) |
|---|---|---|
| Regulatory Structure | Fragmented, with overlapping provisions | Rewritten into a simplified, principle-based framework |
| Digital Disclosures | Paper-heavy investor communication | Digital-first: online submissions, e-reports, simplified documentation |
| Sponsor Eligibility | Scattered across clauses | Tabulated criteria for Mutual Funds and MF Lite sponsors |
| AMC & Trustee Roles | Overlapping responsibilities | Clearly defined and categorised roles |
| Expense Ratio (TER) | Additional 5 bps allowed; statutory levies included | 5 bps removed; levies excluded; full TER disclosure mandated |
| Brokerage Limits | Up to 12 bps (equity), 5 bps (derivatives) | Capped at 2 bps (cash), 1 bps (derivatives) |
| Performance Fees | Not permitted | Voluntary performance-linked TER allowed |
| Trustee Meetings | Minimum 6 per year | Reduced to 4 per year (quarterly) |
| Fund Structure | Separate registration per fund | Proposal for AMC-level ‘umbrella license’ |
| Senior Roles | Limited role definitions | Minimum experience criteria for CEO, COO, CIO, CCO, CRO |
| Sponsor Exit | Ambiguous disassociation process | Clearer exit and disclosure norms |
📄 Access the SEBI Consultation Paper – October 2025
SEBI Consultation Paper – Timeline and Participation
SEBI invites public feedback until 17 November 2025. Submissions can be made via:
Investment Compliance Support for SEBI Mutual Fund Reforms
At Funds-Axis Pvt Ltd, we are proud to support fund managers, trustees, and AMCs in navigating India’s evolving regulatory landscape. Our Compliance and Regulatory Disclosure Platform enables:
- Real-time monitoring of regulatory thresholds
- Automated compliance workflows and audit trails
- Custom rule packs aligned with SEBI, AIF, and global standards
- Digital disclosure and reporting automation
- Governance and oversight tools for trustees and AMC boards
📅 Schedule a demo or
📨 Contact our compliance experts to learn more.
Preparing for SEBI Mutual Fund Regulation Review
Fund managers should strengthen governance, digitise compliance, and realign cost structures by adopting an investor-first, transparent framework. Proactive adaptation in product design, oversight, and disclosures will be critical to staying ahead of regulatory expectations.
SEBI Mutual Fund Reform – FAQs for Fund Managers
Q: Why is SEBI reviewing the Mutual Fund Regulations now?
To modernise the 1996 framework and align it with the current scale, complexity, and digital maturity of India’s mutual fund industry.
Q: What are the key areas of reform?
Governance, expense transparency, digital disclosures, AMC licensing, and investor protection.
Q: How can fund managers prepare for these changes?
Fund managers should strengthen governance, digitise compliance, and realign cost structures by adopting an investor-first, transparent framework and proactively adapting in product design, oversight, and disclosures.
