SEBI Initiates Comprehensive Review of Mutual Fund Regulations

The Securities and Exchange Board of India (SEBI) has launched a comprehensive review of the mutual fund (MF) regulatory framework to make it more investor-centric and industry-friendly, while improving the overall ease of doing business for stakeholders.

Key Objectives of the Review

• Simplification of Existing Rules:
  • The current MF regulations are among the lengthiest in India’s securities law framework and require updating to stay relevant in light of:
    • Changing investor behaviour
    • Technological innovation
    • Industry expansion
• Draft Regulations Underway:
  • SEBI has begun the process of preparing draft regulations, which will be released for public feedback and stakeholder consultation before finalisation.

Focus Areas of Reform

• Investor-Centric Approach:
  • Enhance investor protection
  • Improve transparency and disclosures
  • Encourage better advisory services
• Ease of Doing Business:
  • Simplify compliance for Asset Management Companies (AMCs)
  • Reduce regulatory burden without compromising accountability
• Advisory Functions:
  • A separate consultation paper on MF advisory norms is being prepared to address product suitability and quality of advice.

Strategic Significance

• SEBI views mutual funds as a core pillar of inclusive financial growth and a key driver in expanding retail investor participation.
• The reforms aim to build a robust, transparent, and efficient mutual fund ecosystem, aligned with global best practices.

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