SEBI Proposal May Allow Celebrity-Led Mutual Fund Ads with Scheme Restrictions

The Securities and Exchange Board of India (SEBI) has proposed a new advertising framework that could change how mutual fund companies promote their brands, as per news reports.  

The proposal is part of a consultation paper on a Common Advertisement Code (CAC) that would apply to various market intermediaries, including mutual funds, stock brokers, investment advisers, research analysts and portfolio managers. 

Celebrity Endorsements May Be Allowed 

One of the proposals would permit regulated entities to use celebrities in advertisements for brand-building purposes. For mutual fund companies, this would mean celebrities could appear in campaigns promoting the fund house or its overall brand. 

However, the proposal draws a clear distinction between brand promotion and product promotion. Mutual fund houses would not be allowed to use celebrities to advertise or endorse individual schemes. The restriction would continue even if the broader proposal is adopted. 

Change In Approval Process 

At present, advertisements involving celebrities are subject to a pre-approval process. Mutual fund companies must obtain approval before publishing such campaigns and are also required to follow a reporting mechanism after issuance. 

SEBI has proposed doing away with the prior approval requirement. Instead, regulated entities would need to report advertisements within 24 hours of publication. The proposed system is intended to replace the current process with post-publication reporting. 

Single Code, Common Portal 

The consultation paper also proposes replacing multiple advertising codes currently followed by different regulated entities and market infrastructure institutions. A common set of advertising rules would apply across sectors under Sebi’s supervision. 

In addition, the regulator has suggested the creation of a common digital reporting portal. Advertisements would be reported through this platform within the prescribed timeline. The paper also seeks to provide greater clarity on what qualifies as an advertisement under the rules. 

Read More: India’s Economy to Grow at 6.6% in FY27 as Inflation Risks Persist: S&P Global! 

Conclusion 

The proposal would allow mutual fund companies to use celebrities for corporate and brand-level campaigns while keeping restrictions on endorsements of specific schemes.  

It also outlines a shift towards a common advertising code and a standardised reporting framework for regulated entities. 

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