pc
nid 91424
Mar 23, 2026
pthandapani@vixio.com
India
Securities and Exchange Board of India
financial services
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1535 charsIndia's Securities and Exchange Board Issues Master Circular for Mutual Funds
On March 20, 2026, the Securities and Exchange Board of India (SEBI) issued a master circular for mutual funds. The master circular consolidates and updates the regulatory framework governing mutual fund operations in India.
Master circulars serve as comprehensive guidance documents that compile all relevant regulations, guidelines, and instructions applicable to a specific sector or activity. This circular provides mutual fund industry participants with consolidated regulatory requirements, ensuring clarity on compliance obligations and operational standards. The issuance of an updated master circular reflects SEBI's commitment to maintaining a clear and accessible regulatory framework for the mutual fund sector, which plays a significant role in India's capital markets and retail investment landscape.
The master circular is applicable to all mutual fund houses, asset management companies, and other entities operating within the mutual fund industry under SEBI's regulatory oversight. It consolidates previous circulars, notifications, and guidelines into a single document, reducing regulatory complexity and improving accessibility for industry participants.
Market participants should review the master circular to ensure full compliance with all applicable requirements. The circular becomes effective immediately upon issuance and supersedes any previously issued circulars on the same subject matter.
**Reference:**
Securities and Exchange Board of India (SEBI) Master Circular for Mutual Funds, March 20, 2026
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2441 charsSecurities and Exchange Board of India Issues Master Circular for Mutual Funds
The Securities and Exchange Board of India (SEBI) has issued a master circular for mutual funds, consolidating and updating previous regulatory requirements inti a single document which it states will enhance readability and ensure ease of compliance for the industry.
The master circular covers:
Registration and fund governance with detailed eligibility criteria and registration processes for Asset Management Companies (AMCs) and sponsors, including specific provisions for Private Equity funds to act as sponsors. It mandates robust fund governance, including the formation of Audit, Valuation, and Unit Holder Protection Committees (UHPC) by the Trustees and/or AMCs.
Scheme categorization and operations with clear classification of schemes into equity, debt, hybrid, life cycle funds, and others to ensure uniformity and "true-to-label" products across the industry.
New frameworks and products including the introduction of the "MF Lite" framework featuring relaxed, light-touch provisions exclusively for passively managed schemes. It also establishes rules for specialized investment funds (SIF) , thematic ESG funds , and details the operational framework for the Corporate Debt Market Development Fund (CDMDF).
Risk management and valuation provisions requiring the implementation of a rigorous risk management framework (RMF) covering investment, credit, liquidity, and governance risks. This includes mandates for stress testing open-ended debt schemes , the application of swing pricing during market dislocation , the creation of segregated portfolios for credit events, and strict valuation norms for traded, non-traded, and illiquid securities.
Prudential limits and intermediaries including strict exposure limits for investments in equity, debt instruments, group companies, and overseas securities to prevent concentration risk. It also sets out the code of conduct, certification, and due diligence requirements for mutual fund distributors (MFDs) and introduces regulations for execution only platforms (EOPs).
Disclosures, fees, and investor protection requirements including clear guidelines on total expense ratios (TER), distribution commissions, and a prohibition on using pool accounts by intermediaries for mutual fund transactions. It also mandates the use of the "Risk-o-meter" and potential risk class (PRC) Matrix for transparent product labeling.
The master circular takes effect on April 1, 2026.