Summary of this article
Sebi shifts mutual fund focus toward better investor outcomes.
Regulator proposes net settlement and mutual fund-only PMS framework.
Technology and AI will drive future market fraud supervision.
Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey highlighted the expansion of India's mutual fund industry over the past decade at the 31st Annual General Meeting of the Association of Mutual Funds in India (AMFI) in Mumbai on August 21.
In his address, Pandey stated that between FY16 and July 2026, mutual fund assets under management (AUM) surged from around Rs 15 lakh crore in July 2016 to Rs 86 lakh crore in July 2026, registering a compound annual growth rate of about 19 per cent. However, he highlighted that the success of the mutual fund industry cannot be measured by AuM growth alone. He set a new benchmark for the sector's future and stated that investor outcomes are Sebi’s new focus.
"But success cannot be measured only by AUM, number of folios or schemes. It must ultimately be measured by investor outcomes," Pandey said.
Discussing the roadmap for the next phase of the mutual fund industry’s growth, he outlined Sebi’s principles for fostering better investor outcomes.
"Looking ahead, our approach will continue on the path of simplification, responsible development and investor protection," Pandey said.
He also spoke about several initiatives which are aimed at bringing about the next phase of growth for the mutual fund industry and ensuring better outcomes for investors.
Ease of Doing Business
In order to lessen operational friction without compromising investor safety, Sebi is examining proposals which can potentially streamline clearing and cash management operations for fund houses. To streamline operations and provide more flexibility, the regulator is looking into new settlement methods and permissible business operations.
"Sebi is examining proposals on permitting net settlement for mutual fund schemes and suggestions on permissible activities to be carried out by AMCs," Pandey said.
In addition to the proposals, Sebi has also constituted a dedicated working group to resolve regulatory ambiguity between different types of financial intermediaries. Pandey spoke about the initiatives taken to establish boundaries between pure distribution and comprehensive advisory services. He noted the ongoing review process.
"A Working Group is also reviewing the extant regulatory framework of MFDs and harmonising overlap, if any, between MFDs and Investment Advisers," Pandey said.
Developmental Measures
The market regulator is also exploring new regulated structures to offer professional portfolio oversight to retail investors. Acknowledging that the landscape of wealth management is shifting, Pandey introduced the idea of a dedicated portfolio management structure for mutual funds.
"Investor needs are changing, and models of intermediation must change with them. We are consulting on a Mutual Fund-only PMS framework," Pandey said.
The Sebi Chief also highlighted that the expansion of the mutual fund industry will rely on bringing fresh household savings into regulated financial channels in the future. He also pointed out where the next wave of capital will originate.
"The next generation of investors will increasingly come from smaller towns, first-time investors and underrepresented segments. Products, distribution and communication must adapt accordingly," Pandey said.
Regulatory and Investor Protection Measures
On the supervisory side, Sebi is looking at transforming its oversight to a new architecture to defend against financial scams and fraudulent return claims. Noting the shift towards digital enforcement, he emphasised that monitoring market integrity will use advanced analytical systems.
"Supervision will become increasingly data-driven and technology-led," Pandey said. The regulator has strengthened its offsite surveillance through tools such as R(AI)DAR and Project SUDARSAN to identify misleading advertisements, impersonation and digital fraud,” Pandey said.
Additionally, Pandey noted that the core objective of investor education initiatives must progress beyond basic product awareness to build a financially resilient investor community.
"Investor education must now move beyond telling people that investment products exist. Investors need to know how to assess risk, diversify, recognise fraud and exercise their rights," Pandey said.
