Securities market regulator Sebi has revised mutual fund registration with a single, detailed application form to streamline new AMC entry while maintaining high governance, technology, and compliance standards. The regulator issued the circular on August 17, 2026, as part of its broader efforts to strengthen the mutual fund regulatory framework and improve the quality of information submitted by prospective fund houses. The move comes after the recent overhaul of the SEBI (Mutual Funds) Regulations, 2026 and SEBI Intermediaries Regulations. Previously, mutual fund registration involved a two-stage process with applicants first seeking in-principle approval through Form A and later applying for final registration using Forms C and D. Shweta Rajani, Head – Mutual fund at Anand Rathi Wealth, commented that "the bigger impact will be on new entrants, who will now have to demonstrate much more than financial strength before getting approval."
The new framework introduces two routes for sponsor qualification. Route 1 requires at least 5 years of financial services experience, consistent profitability, and an average net annual profit of ₹10 crore over 5 years. Route 2 allows sponsors to qualify through an experienced management team with a combined 30 years of relevant experience and ₹150 crore of AMC net worth locked in for 5 years. According to Rajani, "new AMCs will now have to have separate grievance handling, complaint history, and all regulatory action and conflict of interest policies even before they receive approval." The revised framework brings ownership details, five-year complaint history, regulatory records, database checks and detailed technology and business continuity plans into a single Form A, with much deeper checks than the previous two-stage process. The application also requires disclosures relating to regulatory actions, complaints, group entities, conflict-of-interest policies, insider trading policies and other governance matters.
The regulatory changes reflect the mutual fund industry's remarkable growth trajectory, with AUM rising from ₹35.32 trillion in July 2021 to a record high of ₹85.76 trillion by July 2026, representing approximately 3-fold growth over five years, according to AMFI data. Rajani noted that "this circular will strengthen the credibility of the mutual fund industry over time. SEBI has always thought about investors first. And this new rulebook will only bring a more meaningful contribution towards consumers going forward in future." The new framework is primarily relevant for new mutual fund registrations, with existing AMCs seeing minimal impact as the changes are focused on entry standards rather than operational requirements.
The revised framework aims to make the mutual fund industry safer at the entry stage by preventing poorly prepared or weakly governed sponsors from entering the market. Rajani emphasized that "the most tangible change will be the higher quality of new AMCs entering the market, but this will take time to become visible." The new requirements include separate grievance handling processes, complaint history disclosure, and detailed conflict of interest policies that must be demonstrated upfront. However, she cautioned that "registration is only the starting point and the safety of investors ultimately depends on how well an AMC is governed and supervised after it begins operations." The framework also requires sponsors to disclose their customer onboarding processes and complaint handling procedures at the registration stage, showing that investor suitability is being considered from the beginning.
Separately, Sebi will float a consultation paper on the distribution framework for corporate bonds in the next few days, according to Maninder Cheema, Executive Director at Sebi. As reported by The Economic Times, Cheema made this announcement during a panel discussion of Great Indian Bond Festival by Grip Invest on Tuesday. The initiative aims to refine the framework governing corporate bond sales and is evaluating additional distributor categories to broaden debt market participation. Cheema highlighted that public issues account for less than 1 per cent of total bond issuance, emphasizing the need for improved access mechanisms. The regulator is focusing on innovation enabled by technology and the platforms that have emerged to allow retail investors access to bonds that were previously not easily accessible.
