The 18th CII Mutual Fund Summit 2025
The Securities and Exchange Board of India (SEBI) is working on a review of mutual fund (MF) regulations, including possible relaxations on clause 24 (b) restrictions on business activities, the scheme categorisation framework, and other recent operational changes, said Executive Director Manoj Kumar.
Speaking at the CII’s 18th Mutual Fund Summit 2025, Kumar said, “We are doing a significant review of regulation 24. Those who are familiar with the regulation may recall that this is the only respective clause of the entire mutual fund regulation. We are also trying to review the entire mutual fund regulations.”
Clause 24 (b) of SEBI’s mutual fund regulations restricts asset management companies from undertaking any other business activities except activities in the nature of portfolio management services, management of offshore funds, advisory services and such other activities as financial services as may be permitted by the SEBI board — and only through subsidiaries.
It also outlines the minimum number of investors, fund manager requirements, and limits within the fund’s corpus for offshore pooled funds. SEBI is expected to possibly relax some of these requirements to make compliance less onerous.
MF scheme categorisation
The regulator aims to consolidate MF categories and simplify scheme names and classifications to make them more accessible to investors beyond the top 30 cities. SEBI has urged the Association of Mutual Funds in India (AMFI) to find ways to simplify nomenclature and create proper differentiation within the prescribed 36 categories, such as large-cap, mid-cap, multi-cap, among others.
Under the new SEBI chairperson Tuhin Pandey, the focus has shifted to re-examining many existing regulations to promote ease of doing business and optimum regulation, with focus being on working together with the industry, Kumar said.
The official also said that the regulator is looking at resolving certain issues and challenges faced by the industry in the existing institutional mechanism as well as skin-in-the-game rules for fund managers.
Similarly, SEBI is also examining different models regarding issues about MF schemes’ total expense ratios (TER), and “finding the best way forward,” Kumar said.
He also pointed out the lack of penetration of the mutual fund industry despite regulatory relaxations and initiatives such as the choti SIP and Tarun yojana to help the mutual fund industry expand.
Published on April 15, 2025
