Sebi’s plan to reduce fees gives mutual funds breathing room

The sharp fee cuts India's mutual fund industry had been bracing for have not materialized.

- Apoorva Ajith

Instead, the Securities and Exchange Board of India's (Sebi) decision to dilute its earlier proposal on brokerage and expense caps has eased margin concerns for fund houses while improving transparency on expenses. These changes, however, are unlikely to meaningfully boost investor returns.On Wednesday, the regulator capped brokerage costs for mutual funds at 6 basis points (bps) in the cash market, down from 12bps, and at 2bps in derivatives, compared with the current 5bps. It also scrapped the additional 5bps that could earlier be charged over exit loads-fees levied when investors redeem their investments. The revised provisions will take effect on 1 April 2026, providing the industry with a three-month transition window.