Mutual Fund Regulation on WebNotes

SEBI Investment Management Department

Sat, 16 May 2026 00:00:00 +0000

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.

EOP regulations 2023 (Execution-Only Platform framework)

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

The EOP (Execution-Only Platform) framework is a regulatory architecture established by SEBI (Securities and Exchange Board of India) through circular SEBI/HO/IMD/IMD-POD-1/P/CIR/2023/74, issued on 19 May 2023. The circular formally defines and regulates platforms that facilitate execution of mutual fund transactions in direct plans without providing investment advice, creating a distinct regulatory category for what had previously been a grey area in Indian mutual fund distribution regulation.

Prior to the EOP circular, direct-plan aggregator platforms such as Kuvera , ET Money , MFU , and BSE StAR MF operated either under AMFI ARN holder registrations (as mutual fund distributors without the commission basis) or as SEBI-registered investment advisers (RIAs). The absence of a specific platform category meant that transaction-only platforms faced regulatory uncertainty about their obligations and permissible activities.

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.

Side-pocketing introduction in Indian mutual funds (2018)

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

Side-pocketing, formally termed “segregated portfolio” in Indian regulatory terminology, is a mechanism that allows a mutual fund scheme to separate debt or money market instruments affected by a credit event into a distinct sub-portfolio, ring-fencing the impaired assets from the main portfolio and protecting ongoing investors from dilution by redemption outflows. The mechanism was introduced in India by the Securities and Exchange Board of India through Circular No. SEBI/HO/IMD/DF2/CIR/P/2018/160, issued on 28 December 2018, directly in response to the valuation and fairness challenges exposed by the IL&FS default of September 2018 . Side-pocketing had been debated in the Indian mutual fund industry for several years before the Association of Mutual Funds in India recommended its adoption in the wake of the IL&FS crisis.