The Securities and Exchange Board of India (Sebi) has streamlined mutual fund registration by consolidating the existing two-stage application process into a single form, as announced in a circular dated August 17, 2026. According to Sebi's circular, the regulator has decided to revise and consolidate the existing forms into a single application form for registration of mutual funds, which were notified in July under the Sebi (Mutual Funds) Regulations, 2026. The current system processes applications in two stages - in-principle approval and final registration - with separate forms A, C and D required for different stages. Under the revised framework, all other conditions specified in Sebi's Master Circular for Mutual Funds dated March 20, 2026 will remain unchanged, ensuring continuity in regulatory requirements. The circular has been issued under Section 11(1) of the SEBI Act, 1992, read with the SEBI (Mutual Funds) Regulations, 2026, with the stated objective of protecting investors and promoting and regulating the securities market.
Under the revised framework, new Form A requires extensive information on the sponsor's financial history, ownership structure, capital strength, management, business activities and regulatory track record. As reported by Rediff Moneynews, the revised Form A covers details of the sponsor, including its constitution, registered and operating addresses, contact details, shareholding pattern, ultimate beneficial ownership, capital structure and proposed net worth contribution to the asset management company (AMC). Sponsors must disclose their latest net worth and audited balance sheet and profit and loss account for the last five financial years. The framework requires fit-and-proper declarations for all stakeholders and disclosure of regulatory actions taken against the sponsor or its associates in India or abroad during the preceding five years. Additionally, detailed business plans will be required, along with information on infrastructure, investor services, IT systems, cybersecurity, system audit, business continuity and disaster recovery arrangements. The revised application also seeks details of the sponsor's business activities and experience, regulated activities of its associates and subsidiaries, management and group companies, regulatory history and fit-and-proper declarations.
The framework provides two eligibility routes for sponsors under Regulation 5(a). Under Route 1, a sponsor needs to carry on business in financial services for at least five years and have a positive net worth in each of the preceding five years. According to the regulations, the sponsor must have a positive liquid net worth exceeding its proposed capital contribution to the asset management company (AMC) and report net profit from financial services in each of the preceding five years with an average net annual profit of at least ₹10 crore from financial services. Route 2 provides an alternative pathway for sponsors that may not meet the profitability and experience requirements, requiring the proposed AMC to have a net worth of at least ₹150 crore at registration time, with the sponsor providing positive liquid net worth exceeding its proposed capital contribution. The initial shareholding equivalent to capital contributed to the AMC, to the extent of at least ₹150 crore, must be locked in for five years. For pooled investment vehicles and private equity sponsors, additional requirements include evidence of fund or investment management experience of at least five years and experience of investing in the financial sector, with committed and drawn-down capital of at least ₹5,000 crore as on the date of application to Sebi.
Sebi has proposed extensive regulatory and background checks as part of the registration process. As reported by Rediff Moneynews, applicants will have to provide verification covering databases including CIBIL, the United Nations Security Council Consolidated Sanctions List, the International Organization of Securities Commissions database and Sebi's prosecution list. The framework requires fit-and-proper declarations for all stakeholders and disclosure of regulatory actions taken against the sponsor or its associates in India or abroad during the preceding five years. Private equity funds and pooled investment vehicles seeking to act as sponsors must provide evidence of at least five years of experience as a fund or investment manager with committed and drawn-down capital of at least ₹5,000 crore. For the AMC, applicants must appoint experienced personnel such that the combined experience of its Chief Executive Officer, Chief Operating Officer, Chief Risk Officer, Chief Compliance Officer and Chief Investment Officer is at least 30 years, with each having at least three years of relevant experience.
The consolidated application form contains a Stage II section for final registration of the AMC, requiring comprehensive details including the AMC's name, office addresses, compliance officer, main object clause, capital structure and shareholding, net worth, associates and group companies, board, key management personnel, internal controls and policy manuals. According to Rediff Moneynews, applicants must provide information on business plans, infrastructure, investor services, IT infrastructure, business continuity and disaster recovery, compliance processes, conflict-of-interest policies and insider and employee trading policies. The AMC will further have to submit its compliance framework, conflict-of-interest policy and insider trading and employee trading policies, emphasizing significant focus on investor protection and internal governance. Sponsors must provide details of customer onboarding and grievance handling, compliance processes, conflicts of interest, insider and employee trading policies, complaints history and regulatory actions. The framework places significant emphasis on investor protection and internal governance, requiring applicants to provide details of customer onboarding and grievance-redressal mechanisms, complaint resolution timelines, compliance processes, conflict of interest policies and systems for monitoring insider and employee trading.
