Sebi Eases Rules for Advisers, But a Few Challenges Remain

Industry seeks ad rule relief, flexible fees, saying the current code stifles marketing, business

- Aprajita Sharma

The Securities and Exchange Board of India (Sebi) floated a consultation paper to facilitate ease of doing business for registered investment advisers (RIAs) and research analysts, addressing "practical challenges" in the current framework.

Though fee-based advisory regulations were first introduced in 2013, the RIA model has struggled to gain pace. The number of RIAs has declined from about 1,300 a few years ago to 967 now. But is the drop in numbers all negative? "The drop also reflects the exit of some non-serious players and trading call providers after the regulatory amendments in 2025. The drop is welcome in that sense," Renu Maheshwari, co-founder of Finscholarz, member of Sebi's intermediary advisory committee, and the chairperson of Association of Registered Investment Advisers (ARIA) said in an interview.

She said the rules are easing, but the investors' mindset would take time to change. "It took Indian investors two decades to trust equities. Behavioral changes like paying for advice may take a generation. Till then, serious RIAs must focus on building sustainable practice. A tipping point will eventually come. Advisers like us who are in the business for over a decade don't advertise, but we get clients consistently."

What Sebi has proposed

Sebi's January 2025 circular eased key hurdles for RIAs, doubling the client cap, cutting net-worth norms for corporates, limiting qualification to a finance degree, and scrapping the five-year experience rule. "Some issues persisted, 90% of which have now been addressed in the latest consultation paper," said Maheshwari in an interview. She is also co-chair of Industry Standard Forum, a body under stock exchanges to frame regulatory standards with stakeholder feedback, and Sebi consultation. The paper is open for public comments until 28 August.