SEBI Plans Tweaks In Mutual Fund Classifications And Easing Business Restrictions On AMCs

The market regulator, Securities and Exchange Board of India, is currently exploring tweaks to the classification mechanism of mutual fund schemes, said executive director Manoj Kumar while speaking at the 18th CII Mutual Fund Summit 2025.

Kumar also mentioned that the regulator is looking to ease the restrictions in regulation 24(b) of SEBI's Mutual Fund Regulations. The said norm lays down the restrictions on the business activities that are permissible for an asset management company to undertake without SEBI approval.

The regulation states that "an asset management company shall not undertake any business activities other than in the nature of management and advisory services provided to pooled assets, including offshore funds, insurance funds, pension funds, provident funds, or such categories of foreign portfolio investors subject to such conditions as may be specified by the Board from time to time, if any of such activities are not in conflict with the activities of the mutual fund."

While talking about the regulation, he mentioned that this is the only norm in the mutual fund framework that is restrictive in nature. He went on to mention that, considering the lengthy nature of the mutual fund regulations, the market regulator is considering reviewing them.

Kumar also mentioned that the regulator is now trying to adopt a conducive regulatory approach in order to create an environment of co-creation and collaboration with the industry.

Talking about more norms where a tweak is expected, Kumar mentioned that the regulator is also discussing the institutional mechanism framework with the industry, as some issues are being seen in it.

The SEBI ED also praised the recent reforms of financial inclusion by the SEBI. These included the Choti SIP that allows small investments starting from only Rs. 250 and the Tarun Yojana that aims to incorporate school students from remote parts of the country to get incorporated into investing.