SEBI Investor Charter for Mutual Funds

The SEBI Investor Charter for Mutual Funds is the standardised rights-and-obligations disclosure document mandated by SEBI Circular SEBI/HO/IMD/IMD-PoD-1/P/CIR/2021/622 dated 13 August 2021 that every Indian mutual fund asset management company (AMC) must display prominently on its website, include in the Statement of Additional Information (SAI) , and make available to investors at every point of interaction with the AMC. The Charter sets out, in plain language, the rights of mutual fund investors, the corresponding obligations of the AMC and its service providers, the grievance-redressal pathway through the AMC’s internal mechanism and the SEBI SCORES portal , and the dos-and-don’ts framework for investors. It is one of SEBI’s principal investor-education and grievance-prevention tools and complements the SCORES portal, the post-2024 Online Dispute Resolution (ODR) overlay, and the SEBI Investor Protection Fund as the foundational triad of investor-protection mechanisms for mutual fund investors in India.

The Charter is anchored in the SEBI (Mutual Funds) Regulations, 1996 and the SEBI Act, 1992 , and is administered by the SEBI Investment Management Department . It is part of a broader 2021 SEBI initiative that introduced parallel investor charters across multiple regulated sectors (broking, depository, investment advisers, portfolio managers, alternative investment funds, REITs, InvITs), reflecting a deliberate policy choice to standardise investor-rights disclosure across the entire SEBI-regulated perimeter. The mutual fund charter has been amended marginally since its introduction, most consequentially through the May 2024 Master Circular consolidation, the post-2023 Execution-Only Platform framework integration, and the 2024 ODR integration that overlaid the SCORES grievance pathway with an independent dispute-resolution mechanism.

The Charter exists in part because of a long-standing investor-protection concern that the underlying disclosure regime (the Scheme Information Document , Key Information Memorandum , and SAI) is too voluminous for practical use by most retail investors. Pre-2021 SEBI surveys consistently found that a significant proportion of mutual fund investors were unaware of their statutory rights with respect to account statements, grievance-redressal timelines, exit-window entitlements when fundamental attributes change, voting rights at material scheme changes, and the route to escalate unresolved grievances. The Charter addresses this gap by providing a single consolidated rights statement that the AMC is required to make prominently available at every customer-facing touchpoint.

Background

Pre-2021 investor-rights disclosure regime

Before the August 2021 Charter, mutual fund investor-rights disclosure operated through several overlapping but uncoordinated mechanisms:

• The Scheme Information Document (SID) Part V on unit-holder rights, with scheme-specific statutory disclosure.
• The Statement of Additional Information (SAI) Section VI on AMC-level unit-holder rights.
• The Key Information Memorandum (KIM) which referenced the SID for rights detail.
• The AMFI Mutual Funds Sahi Hai investor-education programme launched in February 2017.
• The SCORES escalation pathway for unresolved grievances, accessible after AMC-level grievance attempts.

The fragmentation across these mechanisms meant that no single document presented the complete rights-and-obligations framework in plain language. Investors typically encountered the rights disclosure only when reading the SID at the time of subscription (which most retail investors did not do thoroughly), and the SCORES pathway was not consistently known among the retail base.

SEBI investor charter initiative, 2021

In 2021, SEBI launched a coordinated investor-charter initiative across multiple regulated sectors. The mutual fund charter was issued on 13 August 2021. Parallel charters were issued for stockbrokers (August 2021), depository participants, investment advisers, portfolio managers, alternative investment funds, REITs, and InvITs. The coordinated rollout reflected a deliberate policy choice to standardise investor-rights disclosure across the SEBI regulatory perimeter rather than addressing each sector separately.

The initiative followed the recommendations of the SEBI Standing Committee on Investor Protection, which had identified the inconsistency and inaccessibility of investor-rights disclosure across the SEBI universe as a substantial gap in investor protection.

Subsequent integration

Following the initial August 2021 introduction, the Charter has been integrated with subsequent SEBI initiatives:

• The 2023 Execution-Only Platform framework referenced the Charter as the rights standard for EOP-distributed mutual fund transactions.
• The May 2024 SEBI Master Circular on Mutual Funds consolidated the Charter into the operating document.
• The 2024 ODR overlay added an additional escalation mechanism to the Charter’s grievance-redressal pathway.

Regulatory basis

The Charter framework derives from:

The Charter is mandatory; AMCs that fail to display it or maintain it in current form are subject to SEBI advisory and enforcement action.

Content

The Charter is structured into four principal sections.

Section A: Rights of investors

The Charter enumerates the principal statutory rights of mutual fund unit-holders:

Information rights

1. Right to receive the SID, SAI, and KIM: Free of charge on request. The AMC must maintain current versions on its website.
2. Right to receive account statements: Within 5 business days of each transaction (electronic delivery); annual statements on request; the Consolidated Account Statement (CAS) on a monthly or half-yearly basis depending on transaction activity.
3. Right to receive NAV information: Daily on the AMFI website and the AMC’s own website by 11.00 p.m. (9.00 p.m. for overnight funds).
4. Right to receive financial results: Half-yearly unaudited and annual audited scheme financial results, published in the mutual fund annual report .
5. Right to receive monthly factsheets: Portfolio composition, performance, and the monthly-updated riskometer level.

Transaction rights

6. Right to subscribe and redeem at NAV: Subject to the applicable NAV and cut-off rules and the SEBI NAV applicability rule of 2021 .
7. Right to redemption proceeds within prescribed timelines: Open-ended schemes must process redemptions within 3 business days (equity) or earlier (liquid and overnight funds).
8. Right to fair treatment in allotment: Particularly relevant for NFO allotment and basis-of-allotment for over-subscribed offerings.

Voting rights

9. Right to vote on material scheme changes: At the 75 per cent threshold (by value) for fundamental attribute changes, scheme winding-up, and other material changes under Regulation 18(15A) and Regulation 39 (winding-up provision invoked in the Franklin Templeton case ).

Exit rights

10. Right to exit without load when fundamental attributes change: Under Regulation 18(15A), a mandatory 30-day exit window at NAV without exit load.

Grievance rights

11. Right to grievance redressal: Grievances must be acknowledged within 3 business days and resolved within 30 calendar days by the AMC. Unresolved grievances may be escalated to the SEBI SCORES portal and to the post-2024 ODR overlay.
12. Right to know the grievance officer: AMCs must disclose the Investor Relations Officer’s name, email, phone number, and physical address.

Distress and inheritance rights

13. Right to nomination: Investors may nominate up to three nominees with percentage allocation under the nomination on mutual fund folio framework.
14. Right to simplified transmission: For folios up to Rs 5 lakh, under the April 2023 simplified transmission threshold.
15. Right to claim unclaimed dividends and redemptions: Unclaimed amounts are transferred to the Investor Protection Fund after a specified period; investors may still claim these amounts through the AMC.
16. Right to retrieve forgotten folios: Through MITRA , the joint CAMS-KFin forgotten-folio retrieval portal under the MITRA framework .

Disclosure rights

17. Right to disclosure of fund manager and key personnel: In the SID and SAI.
18. Right to disclosure of TER: Both Direct and Regular plan TERs disclosed in the KIM and SID.
19. Right to disclosure of portfolio: Half-yearly portfolio disclosure for all schemes, monthly factsheet portfolio composition.

The detailed catalogue of unit-holder rights is at the mutual fund unit-holder rights reference.

Section B: Obligations of investors

The Charter also clarifies what investors are expected to do in return:

1. Provide accurate and complete KYC details under the KRA-CKYC framework and through SEBI-registered KYC Registration Agencies.
2. Keep contact details (email, mobile, address) updated at every linked folio.
3. Read the SID, SAI, and KIM before investing, particularly the riskometer, asset allocation, and fees sections.
4. Register nominations at the time of folio creation and update them on material life events.
5. Avoid the prohibited practices (cash transactions, blank-signed forms with distributors, off-channel transactions).
6. Maintain transaction records for tax-reporting purposes.
7. Provide information and consents required by tax law including FATCA declarations for US-connection investors and FEMA declarations for NRIs.

Section C: Dos and Don’ts

The Charter includes a plain-language Dos and Don’ts section:

Do:

• Verify the AMFI registration number (ARN) of any distributor before investing through them.
• Check scheme details on the AMFI website before investing.
• Read the SID and KIM thoroughly before subscribing.
• Use SEBI-registered Execution-Only Platforms or SEBI-registered Investment Advisers for direct-plan investing.
• Update nomination details and bank account details promptly.
• Reconcile against the Annual Information Statement at tax-filing time.

Don’t:

• Provide blank-signed transaction forms to distributors.
• Accept cash receipts for mutual fund investments.
• Subscribe based on unverified return promises by distributors.
• Subscribe through unauthorised channels claiming to offer mutual fund products.
• Disregard the monthly-updated riskometer level.
• Ignore the TER difference between Direct and Regular plans.

Section D: Grievance redressal mechanism

The Charter sets out the step-by-step grievance escalation pathway:

1. AMC-level grievance: Investor raises the grievance with the AMC Investor Relations Officer through the published email, toll-free number, or written communication. The AMC must acknowledge within 3 business days and resolve within 30 calendar days.
2. SCORES escalation: If unresolved within 30 days or if the investor is dissatisfied with the AMC’s response, the grievance is escalated to the SEBI SCORES portal at scores.gov.in.
3. Online Dispute Resolution (ODR): Following the 2024 ODR framework introduction, an additional layer of independent dispute resolution is available for grievances not resolved through SCORES.
4. Securities Appellate Tribunal (SAT): For grievances arising from SEBI orders, appeal lies to the SAT under Section 15T of the SEBI Act.
5. Supreme Court: For questions of law arising from SAT orders, appeal lies to the Supreme Court under Section 15Z.

Display and distribution obligations

AMCs are required to:

• Display on website: The Charter must appear prominently on the AMC’s homepage and in the Investor Relations section, accessible without authentication.
• Include in SAI: The Charter is incorporated into Section VI of the SAI (rights of unit-holders), updated annually.
• Link in digital communications: Every transaction confirmation, account statement, and material AMC communication must include a link to the Charter.
• Display at offices: AMC offices, RTA offices (CAMS , KFin Technologies ), and authorised service centres must display the Charter at physical premises.
• Distribute through MFD and EOP channels: Mutual fund distributors and execution-only platforms (Groww , Kuvera , ET Money , Zerodha Coin , MFU , MF Central ) must make the Charter available at the point of investor onboarding.

The Charter must be updated to reflect material regulatory or operational changes; the AMC must republish the updated version within the prescribed timeline of the change.

Enforcement

SEBI’s Investment Management Department monitors compliance through:

• Periodic inspections of AMC websites: To verify the Charter’s presence, currency, and visibility.
• Investor feedback through SCORES: Grievances that reveal Charter-related deficiencies (for example, AMCs failing to acknowledge a grievance within 3 business days) trigger compliance review.
• AMFI member oversight: AMFI monitors its member AMCs’ Charter compliance under its Best Practice Guidelines framework.
• Audit findings: The SEBI mutual-fund compliance audit framework includes Charter compliance as a review item.

AMCs found to have an outdated, incomplete, or non-prominently-displayed investor charter on their website have received SEBI advisory letters. More egregious non-compliance has produced formal directions and, in select cases, monetary penalties.

Integration with SCORES and ODR

The Charter is operationally tied to the SCORES portal for grievance escalation. The pathway:

1. Grievance raised with AMC under the Charter’s 3-and-30-day timeline.
2. If unresolved or dissatisfactory, escalation to SCORES.
3. SCORES routes the grievance to the AMC for resolution within an additional SEBI-monitored timeline.
4. If still unresolved, the post-2024 ODR overlay provides independent dispute resolution.

The integration is critical because the Charter, on its own, would be a static disclosure document; the SCORES-and-ODR integration gives it operational teeth. The grievance-resolution data published by SEBI through the SCORES platform provides an aggregate-level enforcement signal that can identify AMCs with systematic Charter compliance gaps.

Comparison with other sector charters

The SEBI investor charter initiative of 2021 produced charters across multiple regulated sectors. The mutual fund charter has structural similarities and some distinctive features:

The cross-sector charter coverage is intended to produce a consistent investor-rights baseline across the SEBI regulatory perimeter while accommodating sector-specific operational differences.

Investor-side practical use

For the typical retail mutual fund investor, the principal practical uses of the Charter are:

• Verifying rights at the point of subscription: Reviewing the Charter before subscribing to confirm the rights framework that applies.
• Identifying the grievance route: When a grievance arises, the Charter provides the step-by-step escalation pathway.
• Confirming entitlement to specific timelines: Account statement within 5 business days, grievance resolution within 30 calendar days, redemption proceeds within 3 business days, exit window of 30 days for fundamental attribute changes.
• Identifying the SCORES portal address: As the formal escalation route for unresolved grievances.
• Understanding the nomination and transmission framework: The simplified transmission threshold of Rs 5 lakh and the up-to-three-nominee allowance.

The Charter is the most accessible single rights-and-obligations document available to retail mutual fund investors and is the recommended starting point for investors seeking to understand the regulatory protections that apply to their holdings.

International comparison

The Indian SEBI Investor Charter is broadly comparable to investor-rights frameworks in other regulated mutual fund markets:

• United States: The Securities and Exchange Commission’s Investor Bill of Rights and the various fund-specific disclosures collectively produce a similar rights statement, with the FINRA broker-dealer rules adding the distribution-channel rights.
• European Union: The UCITS Directive and the PRIIPs Regulation prescribe specific disclosure documents (UCITS KIID, PRIIPs KID) that contain rights elements, but a unified investor charter is less common at the EU level.
• United Kingdom: The Financial Conduct Authority’s Consumer Duty framework (effective 2023) requires firms to act in customer interests, with similar substantive content to the Indian Charter.
• Australia: The Australian Securities and Investments Commission’s design-and-distribution-obligations regime is structurally analogous.

The Indian Charter is distinctive in its compactness (a single document covering rights, obligations, dos and don’ts, and grievance pathway) and in its tight integration with the SCORES enforcement mechanism.

Recent developments

May 2024 Master Circular consolidation

The SEBI Master Circular reissue of May 2024 consolidated the Charter into the operating document. No substantive changes were made to the Charter text; the consolidation was an operational simplification.

2024 ODR overlay

The 2024 introduction of the Online Dispute Resolution framework added an independent layer to the grievance-resolution pathway. The Charter’s grievance section was updated to reflect the new ODR option.

Mandatory nomination integration (April 2023)

The April 2023 SEBI circular making nomination mandatory for individual folios opened after 1 October 2022 produced a Charter update on the nomination rights section. The simplified transmission threshold of Rs 5 lakh was also incorporated.

EOP framework integration (July 2023)

The 2023 Execution-Only Platform framework integration referenced the Charter as the rights standard applicable to EOP-distributed mutual fund subscriptions.

Standardised grievance-data publication

SEBI has published grievance-resolution statistics through the SCORES portal on a quarterly basis since 2022, enabling industry-level monitoring of Charter-related compliance.

Capital gains tax regime update

The Finance (No. 2) Act, 2024 capital gains regime update required a Charter update to reflect the new capital gains tax framework and the post-23-July-2024 rate structure.

See also

• Mutual fund
• Mutual fund industry in India
• Mutual fund unit-holder rights
• SEBI (Mutual Funds) Regulations, 1996
• SEBI Investment Management Department
• SEBI Act, 1992
• Scheme Information Document (SID)
• Statement of Additional Information (SAI)
• Key Information Memorandum (KIM)
• Mutual fund annual report
• Mutual fund riskometer
• Mutual fund consolidated account statement (CAS)
• Applicable NAV and cut-off rules
• SEBI NAV applicability rule 2021
• Total Expense Ratio (TER)
• Mutual fund exit load cap
• Nomination on mutual fund folio
• MITRA mutual fund
• MITRA forgotten-folio retrieval
• SEBI SCORES portal
• SEBI SCORES investor grievance
• AMFI
• AMFI ARN
• AMFI Best Practice Guidelines
• AMFI investor grievance matrix
• Mutual Funds Sahi Hai
• Franklin Templeton winding-up 2020
• Capital gains tax in India
• Annual Information Statement (AIS)
• Mutual fund RTA
• CAMS
• KFin Technologies
• MF Central
• MFU (Mutual Fund Utility)
• SEBI EOP Regulations 2023
• Groww
• Kuvera
• ET Money
• Zerodha Coin
• SEBI mutual-fund compliance audit

References

1. SEBI Circular SEBI/HO/IMD/IMD-PoD-1/P/CIR/2021/622, 13 August 2021, Investor Charter for Mutual Funds.
2. SEBI (Mutual Funds) Regulations, 1996, Regulation 18(15A), Regulation 29(e), Regulation 39, as amended.
3. SEBI Act, 1992 (Act No. 15 of 1992), Sections 11, 15T, 15Z, 30.
4. SEBI Master Circular on Mutual Funds, SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/137, 27 May 2024.
5. SEBI Circular on Nomination, April 2023.
6. SEBI Circular SEBI/HO/IMD/IMD-POD-1/P/CIR/2023/74, July 2023, Execution-Only Platform Framework.
7. SEBI SCORES portal, scores.gov.in.
8. SEBI Online Dispute Resolution Framework, 2024.
9. AMFI Best Practice Guidelines on Investor Charter Display, Association of Mutual Funds in India.
10. SEBI Standing Committee on Investor Protection, deliberations and recommendations, 2020 to 2021.