The Securities and Exchange Board of India (SEBI) has cleared a set of important regulatory reforms for the mutual fund industry, aimed at enhancing investor protection, encouraging wider participation, and deepening financial inclusion. The decisions were taken at the regulator’s latest board meeting held on Friday.
Key Decisions from the Meeting
- Exit Load Cap Reduced
SEBI has lowered the maximum exit load that mutual fund schemes can charge from 5% to 3%. While most schemes currently levy between 1% and 2%, the move brings regulatory limits closer to prevailing industry norms, while still leaving flexibility for funds that invest in less liquid assets. - Revised Incentive Structure for B-30 Cities
To drive mutual fund penetration beyond the top 30 cities, SEBI has revamped distributor incentives. Under the new framework, incentives will be available only for first-time investors (identified by a new PAN) from B-30 locations.
- Lumpsum investments: Up to 1% of the first application amount
- SIPs: Up to 1% of total investment in the first year
- Overall cap: ₹2,000 per investor
- Incentives to Promote Gender Inclusion
For the first time, SEBI has introduced specific incentives to encourage women investors. Distributors will earn additional commissions for onboarding new women investors, identified by a new PAN. The payout structure will mirror the B-30 city model.
Broader Impact
Through these reforms, SEBI seeks to balance investor protection with market expansion. The regulator expects the changes to not only reduce costs for investors but also extend mutual fund access to smaller towns and underrepresented groups, including women.
Disclaimer:
This article is intended solely for educational and informational purposes. The securities or companies mentioned are provided as examples and should not be considered as recommendations. Nothing contained herein constitutes personal financial advice or investment recommendations. Readers are advised to conduct their own research and consult a qualified financial advisor before making any investment decisions.
Investments in securities markets are subject to market risks. Please read all related documents carefully before investing.