SEBI Investment Management Department
The Investment Management Department (IMD) is the operational department of the Securities and Exchange Board of India (SEBI) responsible for regulating and supervising collective investment vehicles and investment-management intermediaries in India. The department is the nodal SEBI unit for mutual funds, portfolio managers, investment advisers, alternative investment funds (AIFs), venture capital funds, real estate investment trusts (REITs), and infrastructure investment trusts (InvITs). It is constituted within SEBI under the authority of the SEBI Act, 1992 , reports to the Executive Director (Investment Management), and is headquartered in Mumbai with operational presence at SEBI’s regional offices in Delhi, Kolkata, Chennai, and Ahmedabad.
The IMD is the issuing authority for substantially all SEBI circulars affecting the mutual fund industry in India and the principal scrutiny body for every scheme launch, fundamental attribute change, sponsor or AMC registration, AIF registration, and portfolio manager registration. The department’s Master Circular on Mutual Funds, most recently reissued in May 2024, is the single consolidated operating document under which the AMC industry operates. Below the master circular, the department continuously issues subordinate circulars and consultative papers; through 2020 to 2026 the IMD has produced more than thirty substantive circulars addressing scheme categorisation, the riskometer framework , the NAV applicability rule , swing pricing, stress testing, the MF Lite framework , and the Specialised Investment Fund (SIF) framework .
The department’s scope has expanded substantially since its constitution in the early 2000s. Originally a single division handling mutual fund registrations and scheme filings, the IMD now operates as a portfolio of departments (the SEBI 2023 reorganisation designates the investment management portfolio as IMD-PoD-1 and IMD-PoD-2) with separate divisions for mutual funds, portfolio managers, investment advisers, AIFs, and the cross-cutting policy and research function. As of April 2026, the IMD oversees approximately 44 mutual fund AMCs managing Rs 70 lakh crore in assets, over 400 SEBI-registered portfolio managers managing Rs 35 lakh crore, approximately 1,400 registered investment advisers, and over 1,200 registered AIFs across the three SEBI categories.
History
Pre-statutory era
For most of the period from 1947 to 1992, capital-market regulation in India was distributed across the Controller of Capital Issues in the Ministry of Finance (for primary issues), the recognised stock exchanges under the Securities Contracts (Regulation) Act, 1956 (for secondary trading), and the Reserve Bank of India for certain aspects of the bond and money market. There was no single statutory regulator with a portfolio for collective investment vehicles. The Unit Trust of India operated under its own 1963 statute, and the early entries of public-sector bank-sponsored mutual funds after 1987 were administered through ad-hoc Government of India guidelines.
SEBI as statutory body, 1992
The SEBI Act, 1992, constituted SEBI as a statutory regulator with tripartite mandate to protect investors, promote market development, and regulate the securities market. Section 11(2)(c) and Section 11(2)(d) of the parent statute confer express jurisdiction over mutual funds and collective investment schemes. In its early years, a single SEBI division handled all market intermediaries; the volume of mutual fund filings was modest, and a dedicated department was not required.
Constitution of the IMD, early 2000s
The 1993 SEBI (Mutual Funds) Regulations and the substantially expanded SEBI (Mutual Funds) Regulations, 1996 produced a sharp increase in regulatory volume. The 1996 Regulations introduced the three-tier sponsor-trustee-AMC structure, mandatory scheme registration, the comprehensive disclosure regime including the Scheme Information Document (SID) and the Statement of Additional Information (SAI) , and the foundation of the modern compliance regime. By the early 2000s the IMD was constituted as a distinct department within SEBI’s headquarters.
Expansion of mandate, 2010s
Through the 2010s the IMD’s portfolio expanded in three directions. First, portfolio managers, who had previously been a relatively small intermediary class, were brought into a more elaborate regulatory regime through the SEBI (Portfolio Managers) Regulations, 1993, replaced by the SEBI (Portfolio Managers) Regulations, 2020. Second, the SEBI (Investment Advisers) Regulations, 2013, brought a new class of fee-only intermediaries within the IMD’s mandate. Third, the SEBI (Alternative Investment Funds) Regulations, 2012, established a unified regime for venture capital, private equity, debt funds, and hedge fund strategies, with the IMD as the regulator. REITs (SEBI (REIT) Regulations, 2014) and InvITs (SEBI (InvIT) Regulations, 2014) were added subsequently.
2017 scheme rationalisation
The IMD’s most far-reaching structural intervention was the scheme rationalisation circular of October 2017 , which mandated the consolidation of more than 2,000 open-ended schemes into approximately 550 across 44 AMCs through merger and conversion. The rationalisation, implemented over six months, remains the single largest regulatory exercise in the history of the Indian mutual fund industry.
Portfolio of Departments reorganisation, 2023
The 2023 SEBI organisational restructuring grouped related departments into Portfolios of Departments (PoDs). The investment management function was redesignated IMD-PoD-1 and IMD-PoD-2, with internal sub-allocation across mutual funds, portfolio managers, investment advisers, AIFs, REITs, and InvITs. The circular-issuing code now consistently uses the prefix SEBI/HO/IMD/IMD-PoD-1/ for most mutual fund circulars and IMD-PoD-2 for certain AIF and REIT matters.
Organisational structure
The IMD operates under the Executive Director (Investment Management), who reports to the Chairman or to a whole-time member. As of 2026, the department comprises the following divisions:
Division of Funds I (DF-I)
Responsible for registration of new mutual funds, including the review of sponsor and AMC eligibility under Regulation 7 and Regulation 21, trustee approvals, and annual registration renewals. The division also reviews sponsor changes, AMC mergers, and the sponsor eligibility alternative test of 2023 .
Division of Funds II (DF-II)
Oversees all scheme-level filings: new fund offers (NFOs), changes in fundamental attributes, scheme mergers and conversions, half-yearly portfolio disclosures, and ongoing compliance monitoring. DF-II reviews the Scheme Information Document (SID) , Statement of Additional Information (SAI) , and Key Information Memorandum (KIM) for every scheme launch.
Division of Portfolio Managers (DP)
Regulates entities registered under the SEBI (Portfolio Managers) Regulations, 2020, including discretionary, non-discretionary, and advisory portfolio management services. The minimum investment threshold for retail PMS subscriptions has been Rs 50 lakh since 2020.
Division of Investment Advisers (DIA)
Regulates individual and institutional investment advisers (RIAs) registered under the SEBI (Investment Advisers) Regulations, 2013. The DIA also oversees the post-2023 Execution-Only Platform framework under the SEBI EOP Regulations, 2023 .
Division of Alternative Investment Funds (DAIF)
Regulates AIFs under the SEBI (Alternative Investment Funds) Regulations, 2012, across Category I (social and infrastructure venture capital), Category II (private equity, real estate, debt funds), and Category III (hedge funds, public-market strategies). The DAIF has been particularly active since 2023 on disclosure and due-diligence tightening following concerns about the use of AIF structures for the evergreening of bank loans.
Division of REITs and InvITs (DRI)
Administers the SEBI (REIT) Regulations, 2014, and the SEBI (InvIT) Regulations, 2014. The 2024 amendments introduced fractional-ownership product structures (Small and Medium REITs) and lowered the minimum investment thresholds for public REITs.
IMD Policy and Research
A cross-cutting unit synthesises industry data from AMFI and SEBI filings, develops policy proposals, and coordinates with the Ministry of Finance, the Reserve Bank of India , and the Ministry of Corporate Affairs on cross-cutting issues including overseas investment limits, taxation under the Income Tax Act, and FEMA-related matters.
Regulatory functions
Registration
The IMD is the registration gatekeeper for every entity within its regulatory perimeter. The registration framework varies by entity type:
| Entity | Registration regulation | Minimum capital |
|---|---|---|
| Mutual fund AMC | MF Regulations 1996, Regulation 21 | Rs 50 crore net worth |
| MF Lite AMC (passive only) | MF Lite framework 2024 | Rs 35 crore net worth |
| Portfolio Manager | PM Regulations 2020 | Rs 5 crore net worth |
| Investment Adviser (Individual) | IA Regulations 2013 | Rs 5 lakh net worth |
| Investment Adviser (Body Corporate) | IA Regulations 2013 | Rs 50 lakh net worth |
| Alternative Investment Fund (Cat I, II) | AIF Regulations 2012 | Rs 20 crore corpus minimum |
| Alternative Investment Fund (Cat III) | AIF Regulations 2012 | Rs 20 crore corpus minimum |
Registration applications are scrutinised within the IMD against eligibility, fit-and-proper, capital, and operational-readiness criteria. The IMD has discretion to refuse registration with reasons, and refusals may be appealed to the Securities Appellate Tribunal under Section 15T of the SEBI Act.
Scheme filing review
Before launching any new mutual fund scheme, an AMC must file the draft SID with the IMD. The department reviews the filing for:
- Categorisation compliance: conformity with the SEBI scheme rationalisation circular of 2017 .
- Investment mandate consistency: portfolio construction is consistent with the stated benchmark and asset allocation.
- Disclosure completeness: full riskometer, benchmark riskometer, expense structure, tax disclosure, and exit-load disclosure.
- Compliance with investment restrictions: conformity with the Seventh Schedule of the MF Regulations (exposure limits, concentration limits).
The standard review window is 21 working days, extendable with reasoned cause. SEBI may issue observations requiring modifications before the AMC can proceed to the NFO.
Fundamental-attribute changes
Any change to the fundamental attributes of a scheme, including its investment objective, asset allocation bands, benchmark, or load structure, requires IMD clearance under Regulation 18(15A) and a mandatory exit window for unit-holders (typically 30 calendar days at NAV without exit load). The same procedural framework applies to scheme mergers and conversions.
TER monitoring
The IMD monitors compliance with the Total Expense Ratio (TER) slabs under Regulation 52 through periodic data submissions to AMFI and direct scrutiny of scheme expense accounts. Material TER violations have produced directions and monetary penalties; cosmetic violations are typically resolved through corrective action.
Circular issuance
The IMD is the issuing authority for substantially all SEBI circulars affecting investment-management intermediaries. Circulars are typically prefixed SEBI/HO/IMD/ followed by a sub-code that identifies the issuing division. The codes in current use are:
| Sub-code | Division |
|---|---|
| IMD-PoD-1 | Investment Management Portfolio of Departments 1 (mutual funds, master circulars) |
| IMD-PoD-2 | Investment Management Portfolio of Departments 2 (AIFs, REITs, certain PMS matters) |
| DF1, DF2, DF3 | Pre-2023 mutual fund divisions (still in use for older circulars referenced in current filings) |
| DP | Portfolio Managers division |
| DIA | Investment Advisers division |
Below the master circular, the IMD continuously issues subordinate circulars and consultative papers. The accumulated body of IMD circulars constitutes the principal source of operational rules for the AMC industry.
Frameworks under IMD jurisdiction
The IMD administers a portfolio of substantive regulatory frameworks. The principal frameworks for the mutual fund industry are:
| Framework | Year | Subject |
|---|---|---|
| SEBI (Mutual Funds) Regulations, 1996 | 1996 | Master regulations |
| Categorisation and rationalisation | 2017 | 36-category scheme framework |
| Multi-cap reclassification | 2020 | 25-25-25 large-mid-small mandate |
| Riskometer six-level revision | 2020 | Portfolio-based risk classification |
| NAV applicability reform | 2021 | Funds-realisation cut-off rule |
| Skin-in-game rule | 2021 | Sponsor commitment requirements |
| Swing pricing framework | 2021 | Stressed-market NAV adjustment |
| Compliance audit framework | 2023 | Standardised AMC audits |
| Stress testing framework | 2024 | Small- and mid-cap days-to-liquidate |
| Sponsor eligibility alternative test | 2023 | AUM and experience pathway |
| MF Lite framework | 2024 | Passive-only AMC regime |
| Specialised Investment Fund (SIF) | 2024 | New high-flexibility product class |
| Master Circular on Mutual Funds | 2024 reissue | Consolidated operating rules |
Adjacent frameworks under the same department include the SEBI (Portfolio Managers) Regulations, 2020, the SEBI (Investment Advisers) Regulations, 2013, the SEBI (Alternative Investment Funds) Regulations, 2012, the SEBI (REIT) Regulations, 2014, and the SEBI (InvIT) Regulations, 2014.
Relationship with AMFI
The Association of Mutual Funds in India (AMFI) is the principal self-regulatory body for the Indian mutual fund industry, recognised under Section 11(2)(e) of the SEBI Act. AMFI operates under the IMD’s oversight. Its ARN registration framework for distributor empanelment, the AMFI Code of Ethics, the AMFI Best Practice Guidelines, the AMFI advertisement code, the AMFI investor grievance matrix , and the AMFI daily NAV and aggregated industry data portals are all underpinned by IMD mandates. AMFI submits aggregated industry data to the IMD on a monthly basis, enabling macro-prudential monitoring of flows, concentration, and TER trends. The two organisations operate in close coordination, with AMFI typically taking the operational lead on industry-wide implementation matters under IMD policy oversight.
Interface with other SEBI departments
The IMD coordinates with adjacent SEBI departments on cross-cutting matters:
| Department | Interface topic |
|---|---|
| Market Regulation Department (MRD) | Trading of mutual fund units on stock exchanges; ETF market-making; close-ended scheme listing |
| Corporate Finance Department (CFD) | REIT and InvIT exposure limits for MF schemes; primary-issue interactions |
| Surveillance Department | Unusual trading in mutual fund units; front-running investigations |
| Enforcement Department (EFD) | Adjudication of MF-related violations; Franklin Templeton 2020 proceedings; Karvy 2019 enforcement |
| Office of Investor Assistance and Education (OIAE) | SCORES escalations for MF grievances via the SEBI SCORES portal |
| Department of Economic and Policy Analysis (DEPA) | Macroeconomic input to flow-related policy |
Cross-departmental coordination is institutionalised through the SEBI Board’s executive committee and through formal inter-departmental working groups on cross-cutting matters such as overseas investment limits and the regulatory perimeter for crypto-asset linked products.
Coordination with other regulators
The IMD coordinates with adjacent statutory regulators on matters spanning multiple regulatory perimeters:
- Reserve Bank of India : Banking interface, payment systems used for inflows and redemptions, overseas investment limits, and the FEMA framework for foreign portfolio investment by mutual funds.
- Income Tax Department: Taxation of mutual fund redemptions, FATCA compliance, and the Annual Information Statement reconciliation framework.
- Ministry of Corporate Affairs (MCA): AMC corporate-law compliance (since AMCs are companies incorporated under the Companies Act).
- Ministry of Finance: Cross-cutting policy on overseas investment caps, taxation, and the legislative agenda for the SEBI Act and the broader securities laws.
- Pension Fund Regulatory and Development Authority (PFRDA): Coordination on the National Pension System investment limits and the boundaries between mutual fund and pension fund regulation.
Enforcement role
Formal adjudication of regulatory violations is handled by SEBI’s Enforcement Department under Section 15I of the SEBI Act, with investigative powers under Section 11C. The IMD’s role is to prepare the factual matrix for enforcement in mutual fund cases and to refer matters to the Enforcement Department for adjudication. Notable enforcement outcomes involving the IMD include:
- Franklin Templeton, 2020 to 2021 : The IMD investigation preceded the Supreme Court-directed audit and the ultimate adjudicating-officer order imposing penalties of approximately Rs 250 crore on the AMC and its CEO and CIO, alongside disgorgement orders.
- Karvy RTA pledge misuse, 2019 to 2020: IMD investigation into the registrar function preceded the consequential structural segregation of RTA and broker-DP functions.
- Front-running cases, 2021 to 2024: Multiple AMC fund managers have faced proceedings based on IMD-initiated referrals to the Surveillance Department.
- Disclosure violations: Periodic enforcement against AMCs for non-disclosure of portfolio changes within mandated timelines under Regulation 13 and Section 11B of the SEBI Act.
Settlement of administrative proceedings under Section 15JB is a parallel resolution mechanism that the IMD frequently uses for non-egregious violations.
Investor education and protection
The IMD drives SEBI’s investor education and protection mandate in the mutual fund space. The principal initiatives include:
- Mutual Funds Sahi Hai campaign: AMFI’s industry-wide investor-awareness campaign, launched in February 2017 under IMD guidance, targeting first-time investors. Annual investor-education expenditure under the campaign is funded out of the 2-basis-point investor-education component of the TER.
- SEBI Investor Charter for Mutual Funds, 2021 : Mandated by IMD circular in August 2021; each AMC must display the rights and obligations of investors on its website.
- SCORES grievance portal : SEBI’s centralised investor grievance portal, accessible for mutual fund grievances after exhaustion of the AMC’s own grievance mechanism. The 2024 amendments introduced the Online Dispute Resolution (ODR) overlay.
- Investor education and awareness component: 2 basis points of daily net assets are earmarked for investor-education programmes under the AMFI investor-education programme, included within the TER cap.
Industry oversight metrics
As of April 2026, the IMD’s regulatory perimeter for the mutual fund industry comprises:
| Metric | Value (approx) |
|---|---|
| Number of registered mutual fund AMCs | 44 |
| Number of MF Lite AMCs (passive-only) | 3 (with in-principle approval) |
| Number of registered portfolio managers | over 400 |
| Number of registered investment advisers | approximately 1,400 |
| Number of registered AIFs | over 1,200 |
| Number of REITs (listed) | 5 |
| Number of InvITs (listed) | 19 |
| Industry mutual fund AAUM | Rs 70 lakh crore |
| Total active SIPs | over 9 crore |
| Monthly SIP inflow run-rate | Rs 26,000 crore |
The aggregated data is published in the SEBI Annual Report and in the monthly AMFI bulletin.
Recent developments
MF Lite framework
The MF Lite framework , notified in October 2024, established a streamlined regulatory regime for passive-only fund houses. The framework lowers the sponsor net worth requirement to Rs 35 crore and provides a simplified compliance regime in recognition of the lower risk profile of passive funds. Three in-principle approvals had been granted by April 2026.
Specialised Investment Funds
The SIF framework , notified in November 2024, sits between conventional mutual funds and the higher-threshold PMS and AIF regimes. SIFs operate with a Rs 10 lakh minimum investment threshold and have access to long-short equity, sectoral concentration, and other strategies inaccessible to conventional mutual funds. The first SIFs launched in 2025.
Sponsor eligibility alternative test
The 2023 sponsor eligibility alternative test introduced an AUM and experience pathway for AMC sponsorship, alongside the traditional five-year financial-services track-record test. The alternative test has enabled new entrants from the technology and fintech sectors to sponsor AMCs.
Stress testing and disclosure
The stress testing framework of 2024 , applicable to mid-cap and small-cap equity schemes, requires monthly disclosure of days-to-liquidate metrics under stressed scenarios. The framework was a response to rapid AUM accretion in those market-cap segments and to concerns about underlying liquidity.
Real-time NAV and intra-day risk consultations
SEBI’s October 2024 consultation papers on real-time NAV publication and intra-day riskometer disclosure for equity and hybrid schemes, originated by the IMD, are under industry deliberation at the time of writing. Both are intended to address the lag between portfolio change and disclosure, and would represent further tightening of the disclosure regime.
Sectoral and thematic NFO criteria
The IMD’s 2025 to 2026 consultation on Sectoral and Thematic NFO criteria, including possible cooling-off periods between launches in the same theme, is under industry consideration. The consultation is part of a broader effort to address concerns about NFO proliferation in narrow themes.
Performance-linked TER
Industry consultation through 2024 to 2026 on a performance-linked TER framework, under which the TER would vary with scheme performance relative to a benchmark, is ongoing. No firm proposal has been notified.
See also
- SEBI Act, 1992
- SEBI (Mutual Funds) Regulations, 1996
- Mutual fund industry in India
- Scheme Information Document (SID)
- Statement of Additional Information (SAI)
- Key Information Memorandum (KIM)
- Total Expense Ratio (TER)
- Mutual fund riskometer
- SEBI scheme rationalisation circular 2017
- SEBI multi-cap reclassification 2020
- SEBI NAV applicability rule 2021
- NAV cut-off reform 2021
- SEBI mutual-fund swing pricing
- SEBI mutual-fund stress-testing framework 2024
- SEBI mutual-fund sponsor eligibility
- SEBI Mutual Fund Lite framework
- SEBI Specialised Investment Fund framework
- SEBI mutual-fund compliance audit
- SEBI mutual-fund overseas investment cap
- SEBI mutual-fund fund-manager limits
- SEBI mutual-fund half-yearly trustee report
- SEBI EOP Regulations 2023
- SEBI Investor Charter for Mutual Funds
- Franklin Templeton winding-up 2020
- AMFI
- AMFI ARN
- AMFI investor grievance matrix
- Mutual Funds Sahi Hai campaign
- SEBI SCORES portal
- SEBI SCORES investor grievance
- Reserve Bank of India
- FEMA
- Annual Information Statement
References
- Securities and Exchange Board of India Act, 1992 (Act No. 15 of 1992), Sections 4, 11, 30.
- SEBI (Mutual Funds) Regulations, 1996, as amended.
- SEBI (Portfolio Managers) Regulations, 2020.
- SEBI (Investment Advisers) Regulations, 2013.
- SEBI (Alternative Investment Funds) Regulations, 2012.
- SEBI (Real Estate Investment Trusts) Regulations, 2014.
- SEBI (Infrastructure Investment Trusts) Regulations, 2014.
- SEBI Master Circular on Mutual Funds, SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/137, 27 May 2024.
- SEBI Annual Report 2024 to 25, Securities and Exchange Board of India, Mumbai, August 2025.
- SEBI Circular SEBI/HO/IMD/DF3/CIR/P/2017/114, 6 October 2017, Categorisation and Rationalisation of Mutual Fund Schemes.
- SEBI Circular SEBI/HO/IMD/DF3/CIR/P/2020/197, 5 November 2020, Product Labelling in Mutual Fund Schemes.
- SEBI Circular SEBI/HO/IMD/DF2/CIR/P/2020/175, 17 September 2020, Cut-off Time and Applicability of NAV.
- SEBI Order in re Franklin Templeton Trustees Services Pvt. Ltd., June 2021.
- SEBI MF Lite Framework Circular, October 2024.
- SEBI Specialised Investment Funds Framework Circular, November 2024.
- AMFI Industry Data, monthly AUM disclosures, Association of Mutual Funds in India.