SEBI Revamps Mutual Fund Rules to Enhance Transparency, Effective April 1, 2026

The Securities and Exchange Board of India (SEBI) has officially announced a new framework for mutual fund regulations, which will be implemented from April 1, 2026.  

These revised norms aim to improve cost transparency, strengthen governance, and increase accountability among asset management entities. 

Revised Regulations Focus on Expense Monitoring and Oversight 

Effective April 1, 2026, SEBI's updated mutual fund regulations will replace the existing structure, introducing enhanced responsibilities for trustees and independent directors. Trustees will now need to exercise deeper scrutiny over investment management agreements, fees paid by schemes, service contracts with related entities, and the fairness of all costs levied on investors. 

Trustees shall be required to detect deficiencies, inform asset management companies (AMCs) in writing, and ensure corrective action is taken. The intent behind these rules is to ensure tighter cost management with a focus on protecting unitholders' interests. 

Changes to Total Expense Ratio (TER) Structure 

Under the revised regulation, only specific expenses will be permitted to be charged to schemes under the Total Expense Ratio (TER). Permissible charges include the base expense ratio, brokerage fees, actual transaction execution costs, statutory levies, and SEBI-approved exit load charges. 

All other costs must be borne by the AMC, trustees or sponsors. This prevents non-specified expenses from being passed on to investors, thereby standardising the expenses structure and enhancing disclosure around scheme costs. 

Read More: SEBI Panel Recommends Margin Reduction for Cash Transactions With 12.5% Floor! 

Governance Measures and Clearer Reporting Protocols 

As part of its governance push, SEBI has called for oversight of remuneration agreements to ensure they do not cause conflicts of interest. Annual reports must now include detailed commentary from trustees, justifying scheme performance and expense disclosures. Reports are also expected to provide per-unit statistics and valuation details. 

In addition, AMCs will be required to circulate digital copies of annual scheme-wise reports to unitholders within specific timelines, reinforcing clarity and accountability. 

Conclusion 

SEBI’s revamped regulations for the mutual fund sector introduce stronger governance checks, stricter cost controls, and clearly defined trustee duties. These measures aim to offer investors more transparent and fair investment practices. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.