On Friday, January 16, 2026, the Securities and Exchange Board of India (SEBI) notified a revamped set of Mutual Fund Regulations, marking a sweeping overhaul of the regulatory framework that has been in place for over three decades.

The revised rules introduce a restructured expense framework, enhanced disclosure norms, and stronger governance requirements for mutual fund houses. The changes are aimed at improving transparency, accountability, and investor protection across the industry. The revised regulations, approved at SEBI’s December board meeting, will come into effect from April 1, 2026.

Performance-Linked Base Expense Ratio Introduced

One of the standout features of the new regulations is the introduction of a base expense ratio that may be linked to a scheme’s performance, subject to conditions specified by the regulator.

“Mutual fund schemes that offer to charge a base expense ratio based on the performance of the scheme shall comply with the expense ratio structure and disclosures thereto as specified by the Board from time to time,” SEBI said in the notification.

Expanded Role for Trustees and Senior Management

The framework also broadens the responsibilities of trustees and key managerial personnel, tightening oversight and reinforcing governance standards across asset management companies (AMCs).

Structural Shift in Expense Disclosure

In a major structural change, the regulations introduce the concept of a base expense ratio (BER), which will reflect only the fee charged by the AMC for managing investors’ funds. Other costs, such as brokerage, securities transaction tax, stamp duty, and exchange fees, will now be disclosed separately. Previously, these expenses were bundled under the total expense ratio (TER).

Also Read: SEBI Introduces Closing Auction Session to Enhance Equity Market Price Discovery

Brokerage Caps Rationalised

SEBI has also rationalised brokerage limits across market segments. In the cash market, the brokerage cap has been reduced to 6 basis points (bps) from an effective 8.59 bps earlier. In the derivatives segment, the net brokerage ceiling has been lowered to 2 bps from 3.89 bps.

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