In a significant regulatory move, the Securities and Exchange Board of India (SEBI) and the Association of Mutual Funds in India (AMFI) are actively exploring measures to cap the number of mutual fund (MF) schemes offered by asset management companies (AMCs). Seeking to curb overlapping products and enhance transparency, the market regulator has tasked AMFI with gathering feedback from industry players on proposed limits. This initiative aims to simplify investor choices by reducing duplication in scheme categories, ensuring that AMCs focus on quality over quantity.
Currently, India’s mutual fund landscape comprises approximately 1,400 schemes—a number SEBI believes risks overwhelming retail investors and diluting accountability. Sources familiar with the matter suggest the move is part of a broader strategy to align India’s financial markets with global standards. Discussions indicate similar guidelines may extend to portfolio management services (PMS), alternative investment funds (AIFs), and brokerage firms, emphasizing a sector-wide drive toward simplicity and compliance. SEBI’s proactive stance reflects concerns that unchecked product proliferation could lead to mis-selling and obscure risk assessments, ultimately undermining investor trust.
Industry experts note that while AMCs recognize the need for consolidation, the proposed caps could force smaller players to reevaluate their business strategies. The regulator’s emphasis on ‘differentiated offerings’ signals a push for innovation within defined boundaries. Meanwhile, AMFI’s role as a mediator underscores the collaborative approach being adopted, balancing regulatory priorities with practical industry insights. As stakeholders await further details, the initiative highlights SEBI’s commitment to fostering a more structured and investor-friendly ecosystem, even as debates continue over implementation challenges and the pace of reform.
