April 1: New mutual fund rules, Stricter NFO timelines, SIF launch

#MutualFundsNFOSIF01April

Mumbai: The Securities and Exchange Board of India (SEBI) has introduced a series of new regulations effective from April 1, 2025. These changes impact fund deployment timelines, introduce a new investment product category called Specialised Investment Fund (SIF), and enable DigiLocker integration for investment statements.

Stricter Timelines for NFOsSEBI now requires AMCs to deploy funds raised through NFOs within 30 business days of unit allotment. If deployment is delayed, a one-time extension of another 30 business days is allowed with Investment Committee approval. Failure to deploy funds within 60 business days will result in a halt on fresh inflows, penalty-free exits for investors, and mandatory notifications to investors.

Stricter timelines for NFOs | SEBI will require asset management companies (AMCs) to deploy funds raised through NFOs within 30 business days of unit allotment. If deployment is delayed, a one-time extension of another 30 business days will be allowed with Investment Committee approval. Failure to deploy funds within 60 business days will result in a halt on fresh inflows, penalty-free exits for investors, and mandatory notifications to investors.

Commission Norms for DistributorsTo curb mis-selling, SEBI has ruled that distributors will earn the lower of the two commissions when investors switch from an existing scheme to a new NFO. This discourages distributors from pushing NFOs for higher commissions.

Commission norms for distributors | To curb mis-selling, SEBI has ruled that distributors will earn the lower of the two commissions when investors switch from an existing scheme to a new NFO. This will discourage distributors from pushing NFOs for higher commissions.

Launch of Specialized Investment Funds (SIFs)SEBI has introduced SIFs as a new category between Mutual Funds and PMS. AMCs with at least three years of operation and an AUM of ₹10,000 crore can launch SIFs. These funds offer flexible investment strategies, including equity, debt, and hybrid long-short, with a minimum investment of ₹10 lakh.

Launch of Specialised Investment Funds (SIFs) | SEBI has introduced SIFs as a new category between Mutual Funds and PMS. AMCs with at least three years of operation and an AUM of ₹10,000 crore can launch SIFs. These funds offer flexible investment strategies, including equity, debt, and hybrid long-short, with a minimum investment of ₹10 lakh.

DigiLocker for Investment TrackingFrom April 1, 2025, investors can store and access their Demat and mutual fund holdings statements in DigiLocker. This integration reduces unclaimed assets and allows nominees to access statements seamlessly, simplifying the transmission process.

DigiLocker for investment tracking | From April 1, 2025, investors will be able to store and access their Demat and mutual fund holdings statements in DigiLocker. This integration will reduce unclaimed assets and allow nominees to access statements seamlessly.

Impact on InvestorsThese changes aim to ensure timely fund deployment, prevent mis-selling, offer structured alternatives through SIFs, and improve investment tracking through DigiLocker. SEBI’s regulations bring more transparency and investor protection to the mutual fund industry.

These changes aim to ensure timely fund deployment, prevent mis-selling, offer structured alternatives through SIFs, and improve investment tracking through DigiLocker. SEBI’s regulations may bring more transparency and investor protection to the mutual fund industry.