Sebi plans overhaul of mutual fund classification, ease restrictive clauses

Amid concerns over the proliferation of thematic MF schemes, Sebi aims to address the lack of differentiation within the 36 prescribed categories

The Securities and Exchange Board of India (Sebi) is looking to overhaul the mutual fund (MF) scheme classifications framework, said Executive Director Manoj Kumar. Speaking at the 18th CII Mutual Fund Summit 2025 in Mumbai, Kumar highlighted Sebi’s focus on consolidating MF categories and making scheme names more accessible to investors beyond major cities.

 

Amid concerns over the proliferation of thematic MF schemes, Sebi aims to address the lack of differentiation.  At present, there are 36 defined categories by Sebi.

 

Kumar also said that the regulator is reviewing restrictive clauses, particularly Regulation 24(b), which limits asset management companies (AMCs) from leveraging their expertise and expanding operations. This regulation governs AMCs’ business activities, including offshore asset management.

 

“Regulation 24(b) hinders MF players’ growth. We’re engaging with the industry to remove such barriers and foster innovation,” Kumar said, emphasising that other MF regulations are facilitative.

 

Sebi is collaborating with the Association of Mutual Funds in India to gather inputs.

 

Additionally, the regulator plans to relax the institutional framework for AMCs to strengthen internal controls and prevent market abuse. Recently, Sebi also eased “skin in the game” norms, reducing mandatory investment requirements for AMCs in their schemes.