India’s securities regulator, Sebi, has implemented a comprehensive overhaul of the mutual fund registration process, introducing a single application form and tighter eligibility standards to enhance transparency and investor protection.
Sebi has overhauled the way mutual funds are registered in India, replacing a two-step approval process with a single consolidated application form that is designed to speed up scrutiny while demanding far more detail from would-be sponsors and asset management companies, according to a circular issued on Monday. The move sits within the regulator’s wider mutual fund regulations framework notified in July and is intended to give the watchdog a fuller picture of an applicant’s finances, ownership, governance and conduct before a licence is granted.
Under the revised process, prospective sponsors must now disclose their shareholding pattern, ultimate beneficial owners, capital structure, net worth, five years of audited accounts and a fuller account of their business history, including any financial services activities and the experience of associated entities. Sebi is also asking for fit-and-proper declarations, checks against sanctions and enforcement databases, and disclosure of past regulatory actions, penalties and litigation, underscoring its focus on investor protection and internal controls.
The new rules also set out two routes for eligibility. One path is aimed at established financial services businesses that can show at least five years of experience, positive net worth over that period and an average annual profit of at least Rs 10 crore from financial services. The alternative route allows applicants that do not meet those profitability and experience tests, but it comes with a tougher capital requirement: the proposed fund house must have at least Rs 150 crore in net worth, to be infused by the sponsor, and the related shareholding must stay locked in for five years. Sebi also wants the senior leadership team to have a combined 30 years of relevant experience.
The overhaul comes after a series of changes that have already reshaped India’s mutual fund industry. Reuters reported earlier this year that Sebi’s 2026 regulations introduced a base expense ratio structure, separated fund management fees from statutory levies such as GST and securities transaction tax, and lowered expense caps across most categories. Other recent circulars have also redrawn scheme classification, including the introduction of life cycle funds and the removal of solution-oriented schemes, as the regulator seeks a cleaner, more transparent framework for investors.
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