Sebi fee revamp to put AMC margins, agent pay at risk

Proposed rule may impact larger funds more as they already operate with slimmer margins

- Apoorva Ajith & Srushti Vaidya

Toplines of mutual fund distributors could come under pressure as asset managers are likely to cut distributor commissions if the Securities and Exchange Board of India’s (Sebi) proposed rules on tweaking the fee structures come into effect.

In a consultation paper on 28 October, Sebi laid out a key change which could impact the revenues of asset management companies (AMCs) and may lead to lower revenues for mutual fund distributors as a second-order effect. The move also comes at a time when investors have started investing directly in mutual funds, and the share of distributors, although high, is decreasing.

The proportion of direct plans in total systematic investment plan (SIP) assets has increased over the last five years from 12% as of March 2020 to 21% as of March 2025, as per the annual report of the Association of Mutual Funds in India (Amfi). Mutual fund investors can either invest directly or through a distributor.