RULEBOOK REFRESHED

SEBI's overhaul trims clutter and resets costs, aiming for a mutual fund rulebook that's clearer and more trustworthy

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For close to three decades, the Securities and Exchange Board of India (SEBI) Mutual Funds Regulations, have served as the foundation of India's mutual fund industry.

However, the framework that was constructed during the early period of liberalization has become overweight and cumbersome after layer upon layer of amendments, circulars and add-on clauses have been made over time.

As the industry outgrew from the UTI-dominated landscape to an ecosystem worth over ₹75 lakh crore, including over 25 crore folios, the previous structure began to stress under its own weight.

Recognizing this, the market regulator has released a sweeping consultation paper proposing a full-scale rewrite of the Mutual Fund Regulations, the first such effort since their inception. This comprehensive draft aims to simplify the regulatory language, reorganize responsibilities of trustees and AMCs, eliminate redundant provisions, and bring coherence to a document that had become too unwieldy for modern use.

The heart of the reform, however, lies in reshaping the cost structure, enhancing transparency, and strengthening investor protection, areas that have historically generated confusion, inconsistency, and frequent disputes. The new proposals go far beyond compliance tweaks; they attempt to modernize how the industry discloses expenses, accounts for statutory levies, charges brokerage, manages conflicts of interest, and communicates with investors.

If adopted, the new framework would not just tidy up a 1990s-era rulebook, it would fundamentally realign the relationship between investors, AMCs, and regulators for the decade ahead.

TRANSPARENCY & INVESTOR PROTECTION - THE CORE OF SEBI'S REFORM