SEBI Proposes Major Mutual Fund Reforms to Cut Costs, Boost Transparency

SEBI has proposed a comprehensive overhaul of the Mutual Fund Regulations to reduce investor costs and enhance transparency in the ₹75.6 lakh crore industry. Key changes include slashing transaction charges—brokerage from 12 bps to 2 bps (cash) and 5 bps to 1 bps (derivatives)—and eliminating the additional 5 bps expense on exit-load schemes. Statutory levies like GST, STT, CTT, and stamp duty will now be excluded from the Total Expense Ratio (TER), with full cost breakdowns mandated for clearer disclosures. SEBI also proposed an optional performance-linked fee structure, revised TER slabs (up by 5 bps in lower tiers), and governance reforms—clarifying AMC-trustee roles, allowing advisory services under firewalls, and shifting to digital communications. Outdated categories like Real Estate and Infrastructure Debt Funds have been removed. Markets reacted sharply, with AMC stocks down up to 10%, as tighter norms may impact revenue. The reforms aim to channel more returns to investors and strengthen trust in India’s growing mutual fund sector.