New Delhi: Markets regulator Sebi has proposed a comprehensive overhaul of mutual fund regulations, introducing clearer definition of Total Expense Ratio (TER) and revising limits on brokerage charges.
The proposals are aimed at bringing regulatory clarity, reducing redundancies, and promoting ease of compliance, the Securities and Exchange Board of India (Sebi) said in its consultation paper.
Sebi has sought public comments on proposals until November 17.
Under the proposed framework, Sebi plans to eliminate the additional 5 basis points (bps) that asset management companies (AMCs) were previously allowed to charge across mutual fund schemes.
This additional expense, introduced to offset the impact of crediting exit loads back to schemes, was first set at 20 bps in 2012 and later reduced to 5 bps in 2018. The additional expense of 5 bps that mutual fund schemes were allowed to charge was transitory in nature, Sebi noted.
Accordingly, with the objective of rationalizing costs
for unitholders, this expense has been proposed to be removed.