Simplifying SEBI's new mutual fund changes

The markets watchdog’s new initiatives can alter and strengthen your rules of engagement

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March 29 was an action-packed day at the Securities and Exchange Board of India (SEBI), as its consultation paper recommended a series of changes for India's mutual fund industry. Here are the ones most relevant for you.

New ESG framework 

The concept of ESG has remained hazy at best, which has spiked the risk of greenwashing. To address this, SEBI has introduced a set of key ESG disclosures called BRSR (business responsibility and sustainability report) Core, which listed companies will need to report and get audited.

As a result, ESG mutual funds will need to invest at least 65 per cent of their money in companies that fall on the right side of BRSR Core. The markets regulator has further announced five new ESG sub-categories, opening the doors for fund houses to launch more environmentally conscious funds. Currently, fund houses can establish just one ESG fund.

What it means for you