Kolkata, Jun 21 (PTI) The Securities and Exchange Board of India (SEBI) is undertaking a comprehensive review of mutual fund regulations to make them more investor-centric and industry-friendly, a senior official said on Saturday.

"We are reviewing the entire mutual fund regulatory framework to enhance ease of doing business for all stakeholders, including the regulator," SEBI executive director Manoj Kumar said at the 17th Mutual Fund Summit organised by the Indian Chamber of Commerce (ICC) here.

Existing regulations governing the sector are among the lengthiest and require simplification to keep pace with evolving investor needs and industry innovations, stakeholders said.

"The process has started and soon we will come out with draft regulations for feedback and consultation process before it is finalised," Kumar said without giving any timeline for the rollout of the new rules.

Kumar outlined the regulator's strategic roadmap to strengthen India's securities market, with mutual funds positioned as a critical pillar in fostering inclusive financial growth and investor protection.

A consultation paper on regulations which governs advisory functions in mutual funds is also in the pipeline.

Addressing the event, Kumar said India has undergone major market transformations under SEBI's stewardship.

These include the shift to an electronic trading ecosystem in 1998, followed by achieving 100 per cent dematerialisation of shares, making India the only jurisdiction globally to do so.

"The third transformation is unfolding now through the mutual fund revolution," he said, calling it a cornerstone of SEBI's "optimum regulation" approach, one that seeks balance among the interests of the regulator, the industry, and investors.

While India's mutual fund industry has crossed Rs 72 lakh-crore in AUM and monthly SIP contributions have touched Rs 28,000 crore, the investor base remains limited to just five crore in a population of 140 crore, Kumar pointed out.

SEBI is also actively reviewing scheme categorisation norms to make them more intuitive for investors, while ensuring all offerings remain "true to label" to prevent mis-selling.

To offer wider choice to investors, SEBI has approved a new product category, referred to as SIF, aimed at investors with ticket sizes between Rs 10 lakh and Rs 50 lakh.

Mutual funds were selected to manage these products given their established governance and handling of retail flows.

Parallelly, SEBI has opened faster registration windows for Portfolio Management Services (PMS) and Alternative Investment Funds (AIF) with similar offerings.

Addressing industry concerns over stress test disclosures for mid- and small-cap funds, Kumar reaffirmed SEBI's disclosure-based regulatory model, stressing that informed investors are central to market resilience.

While he acknowledged that some disclosure requirements may seem burdensome, he assured stakeholders that SEBI remains open to feedback and streamlining processes.

He urged the industry to avoid situations that warrant regulatory intervention, saying, "Our goal is not to disrupt but to allow business to thrive." Highlighting the untapped potential in eastern India, Kumar said SEBI views West Bengal and the Northeast as strategic regions for mutual fund expansion, underscoring the need for targeted penetration efforts.

Echoing this vision, AMFI chief executive V N Chalasani said India is transitioning from financial inclusion to financial well-being, where saving smartly and investing wisely will enable sustainable wealth creation.

He cited the exponential growth of mutual funds post-2017, following SEBI's investor education mandate, which helped expand the investor base and improve financial awareness.

However, Chalasani pointed out that India's mutual fund AUM still forms only about 20 per cent of GDP, compared to a global average of 65 per cent.

He stressed the need for deeper financial literacy, especially in Tier 3 and 4 cities, where AMFI is focusing through school and university programmes, distributor expansion via India Post, and new product innovations aimed at mid-income investors.

"Every Indian can evolve from a saver to an investor and ultimately a wealth creator," he said, calling for sustained collaboration between regulators, industry, educators and investors to build an empowered, financially resilient India. PTI BSM MNB

Mutual fund regulation reform to enhance investor protection and ease of doing business, with draft rules and consultation planned. A comprehensive regulatory review of the mutual fund framework is underway to simplify rules, enhance ease of doing business, and strengthen investor protection. The regulator will issue draft regulations for stakeholder feedback and is preparing a consultation paper on advisory functions. Reforms under review include scheme categorisation, disclosure requirements including stress test disclosures for mid and small cap funds, and process streamlining within a disclosure based regulatory model.