SEBI's New Framework: Boosting Trust and Transparency in Mutual Funds

The Securities and Exchange Board of India (Sebi) has introduced new timelines for deploying funds from New Fund Offers (NFOs) by asset management companies (AMCs) and eased regulations to align AMC employees' interests with unitholders. The changes aim to enhance mutual fund transparency and accountability.

The Securities and Exchange Board of India (Sebi) has announced new measures to enhance the operational flexibility and transparency of mutual funds. The board has set specific timelines for asset management companies (AMCs) to deploy funds collected during New Fund Offers (NFOs), emphasizing enhanced accountability to investors.

According to Sebi's decisions, fund managers must deploy NFO funds based on the scheme's asset allocation within roughly 30 days. Should the timeline not be met, investors are allowed an exit option without incurring exit loads. This stipulation aims to deter excessive fund collections during NFOs.

Further, to bolster protection against mis-selling, Sebi has revised commission structures for switch transactions. Additionally, regulatory adjustments for AMC employees have been relaxed to streamline operations and align their interests with those of unitholders, fostering growth and retention of professionals in the MF sector.

(With inputs from agencies.)