2020 on WebNotes

Stamp duty on mutual funds (2020+)

Tue, 19 May 2026 00:00:00 +0000

Stamp duty on mutual fund transactions in India was introduced from 1 July 2020 under the amended Indian Stamp Act 1899 (as amended by Finance Act 2019). The duty applies at 0.005% on subscriptions (purchase of mutual fund units), with corresponding rates on transfers and other unit-related transactions. The introduction made mutual fund transactions subject to stamp duty for the first time, aligning the treatment with other capital-market instruments.

For Indian retail investors, the stamp duty is small in absolute terms (Rs 5 on every Rs 1 lakh subscription) but is a structural cost recurring on every transaction.

Franklin Templeton six-scheme winding-up (April 2020)

Tue, 12 May 2026 00:00:00 +0000

The Franklin Templeton six-scheme winding-up of 23 April 2020 was the abrupt and unilateral closure of six fixed-income open-end mutual fund schemes by Franklin Templeton Asset Management (India) Private Limited, trapping approximately Rs 25,000 crore (then approximately USD 3.3 billion) of investor assets at the outset. The closure, announced without prior public notice or investor consent, constituted the largest simultaneous wind-up of open-end mutual fund schemes in Indian history. It set off protracted legal proceedings before the Supreme Court of India, a landmark enforcement action by the Securities and Exchange Board of India , and fundamental regulatory changes that reshaped the liquidity and governance framework applicable to all debt mutual funds in the country.

SEBI multi-cap reclassification circular (September 2020)

Tue, 12 May 2026 00:00:00 +0000

The SEBI multi-cap reclassification circular of 11 September 2020, formally Circular No. SEBI/HO/IMD/DF3/CIR/P/2020/185, mandated that all mutual fund schemes categorised as “multi-cap funds” must invest a minimum of 25 percent each in large-cap, mid-cap, and small-cap stocks, with no more than 25 percent in any category left to fund manager discretion. Before this circular, multi-cap funds had operated with complete investment flexibility across market capitalisations, and in practice most had accumulated predominantly large-cap heavy portfolios with minimal mid and small-cap allocations despite their multi-cap category designation. The circular required these funds to substantially increase their small-cap and mid-cap allocations, triggering one of the largest mandatory portfolio rebalancing events in the history of the Indian mutual fund industry . It also prompted the Securities and Exchange Board of India to create a new “flexi-cap fund” category to preserve the option of genuinely flexible equity mandates without the new minimum allocation requirements.

UTI Mutual Fund IPO (2020)

Tue, 12 May 2026 00:00:00 +0000

The UTI Asset Management Company Limited IPO of October 2020 was the initial public offering of India’s oldest and historically most prominent asset management company, bringing to public markets an institution that traced its lineage to the Unit Trust of India Act of 1963. The IPO listed UTI AMC on both the National Stock Exchange of India and the Bombay Stock Exchange on 12 October 2020, at a price of Rs 500 per share, implying a market capitalisation of approximately Rs 6,357 crore at the time of listing. The offering followed the HDFC AMC IPO of 2018 , which had established a market precedent for the valuation of asset-light fund management businesses in India.

Yes Bank AT1 bond writedown impact on mutual funds

Tue, 12 May 2026 00:00:00 +0000

The Yes Bank AT1 bond writedown of March 2020 was a regulatory action by the Reserve Bank of India under a Yes Bank crisis resolution scheme that reduced the value of approximately Rs 8,415 crore of Yes Bank’s Additional Tier 1 (AT1) bonds to zero. For Indian mutual fund schemes and other institutional investors that held these instruments, the writedown caused immediate, total, and permanent NAV losses on that exposure. The episode raised fundamental questions about the risk classification, disclosure, and distribution of AT1 instruments in Indian markets and prompted the Securities and Exchange Board of India to impose new restrictions on mutual fund holdings of AT1 and Tier 2 bank bonds.