Subject: Master Circular for Mutual Funds

Mutual fund compliance framework updated with scheme disclosure, risk management, sponsor rules, and portfolio norms.

Comprehensive regulatory consolidation for mutual funds sets out the updated compliance framework under the SEBI (Mutual Funds) Regulations, 2026, effective from April 01, 2026, and replaces the earlier master circular. It rescinds specified prior circulars while preserving actions already taken, pending applications, accrued rights, liabilities, penalties, and proceedings under the rescinded directions as if they had been issued under the corresponding provisions of this circular. The circular also requires periodic and continuous reporting wherever specified and maintains the continuing force of Board directions specially applicable to mutual funds alongside other law. The circular standardises scheme launch, offer document filing, scheme updates, and investor communication, including SID, SAI and KIM requirements, public availability of documents, NFO timelines, treatment of fundamental attribute changes, merger or consolidation procedures, and conditions for conversion of close-ended schemes into open-ended schemes. It lays down the framework for registration, acquisition of an AMC, sponsor eligibility and disassociation, re-association, change in control, undertakings by new sponsors or trustees, and net worth computation and deployment of liquid net worth. The circular further details product-specific and prudential norms for fund of funds, gold and silver ETFs, equity and debt index funds, hybrid passive funds, ESG schemes, infrastructure debt schemes, and passive fund market-making, including disclosure of tracking error, tracking difference, indicative NAV, and debt index replication factor. It strengthens risk management through stress testing, redemption restrictions, credit risk assessment, segregated portfolio creation and monitoring, liquidity requirements, swing pricing, borrowing limits, cyber security, technology governance, and reporting of AI and ML applications.