The Securities and Exchange Board of India (SEBI) has proposed a new framework that mandates mutual fund houses to launch an additional scheme once their total Assets Under Management (AUM) surpass ₹50,000 crore. This move comes as part of SEBI’s broader effort to enhance product offerings and foster competition in the mutual fund space.
What Has SEBI Proposed?
In a consultation paper released recently, SEBI has suggested that asset management companies (AMCs) whose AUM exceeds ₹50,000 crore should be required to offer an additional active equity-oriented scheme. The rationale behind this proposal is to ensure that large fund houses offer a broader range of products to suit varying investor needs, especially in actively managed equity funds.
This proposed regulation aims to balance the growing dominance of a few large AMCs and encourage better fund diversification across the market.
Why This Matters
- Investor Choice: By offering more schemes, investors will have a wider variety of actively managed options tailored to different risk and return profiles.
- Market Depth: The proposal may help spread investments across more sectors and stocks, contributing to a deeper and more stable market.
- Level Playing Field: It seeks to ensure that large AMCs contribute meaningfully to the development of active strategies and not just passive growth.
Industry Reactions
The industry is evaluating the operational and strategic implications of this proposal. While some experts believe this will empower investors and push AMCs to innovate, others caution about potential scheme overlap and the need for careful fund positioning.
Current Landscape
India’s mutual fund industry has seen massive growth in recent years, with total AUM crossing ₹58 lakh crore as of June 2025. A few large fund houses dominate the market, leading to concerns around concentration of investor money and lack of differentiated offerings in the active fund space.
Next Steps
SEBI has invited public comments on the proposal by the end of July 2025. Based on feedback, the regulator will finalize the rules in the coming months.
Conclusion:
SEBI’s move signals a new phase in mutual fund regulation, focused on expanding investor choice and encouraging innovation among large fund houses. As the AUM benchmarks are crossed, investors can expect new product opportunities tailored to India’s dynamic equity markets.
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