Sebi Revamps Block Deal Framework for Transparency
- The Securities and Exchange Board of India (SEBI) has considerably revised regulations governing mutual funds, effective throughout 2024 and continuing into 2025.
- SEBI has implemented a revised framework for calculating and capping expense ratios for mutual funds.
- To improve clarity for investors, SEBI has refined the categorization of mutual funds.
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SEBI Revamps Mutual Fund Rules: A Comprehensive Guide to the 2024 Changes
Table of Contents
Updated October 9, 2025, 00:42:41
What Happened?
The Securities and Exchange Board of India (SEBI) has considerably revised regulations governing mutual funds, effective throughout 2024 and continuing into 2025. These changes aim to enhance investor protection, increase transparency, and foster a more robust and efficient mutual fund industry.The updates cover a wide range of areas, including expense ratios, fund categorization, and disclosure requirements.
Key Changes to SEBI Mutual fund regulations
The regulatory changes are extensive. here’s a breakdown of the most important updates:
1. Expense ratio Rationalization
SEBI has implemented a revised framework for calculating and capping expense ratios for mutual funds. The goal is to reduce costs for investors, particularly in passive funds. specifically, the total expense ratio (TER) for equity funds has been adjusted, with stricter limits on certain components. SEBI’s board meeting minutes from February 29, 2024 detail these changes.
2.Fund Categorization and Labeling
To improve clarity for investors, SEBI has refined the categorization of mutual funds. This includes more precise definitions for different fund types (e.g., large-cap, mid-cap, small-cap, multi-cap) and stricter requirements for funds to adhere to their stated investment mandates. Funds deviating from their category will face penalties. Livemint reported on the tightening of categorization rules in March 2023, laying the groundwork for the 2024 implementation.
3. enhanced Disclosure Requirements
SEBI is mandating increased transparency through more detailed disclosures by mutual funds. This includes providing investors with clearer information about portfolio holdings, investment strategies, and risk factors. Funds are now required to disclose their portfolio on a more frequent basis – monthly instead of quarterly for certain schemes.The association of Mutual Funds in India (AMFI) website provides access to relevant circulars regarding disclosure requirements.
4. Risk-o-meter Improvements
The risk-o-meter, a tool used to indicate the level of risk associated with a mutual fund scheme, has been enhanced. SEBI has introduced a more granular risk assessment framework and requires funds to update the risk-o-meter more frequently to reflect changes in market conditions and portfolio composition.