The Securities and Exchange Board of India (Sebi) on Monday proposed key relaxations to the Mutual Fund (MF) Regulations, allowing asset management companies (AMCs) to expand their business beyond traditional mutual fund operations.
The proposed changes would enable AMCs to manage and advise pooled non-broad-based funds, which may have fewer than 20 investors, without needing a separate Portfolio Management Services (PMS) licence. Previously, AMCs had to secure a PMS licence to cater to such clients.
Sebi clarified that AMCs can provide management and advisory services to these funds, regardless of the investment route the foreign entity chooses for investing in India. The regulator also proposed allowing AMCs and their subsidiaries to engage in ancillary activities, such as distribution and marketing services, in addition to fund management.
Further, AMCs could act as global distributors for funds managed or advised by themselves or their subsidiaries, and serve as points of presence for pension funds, in line with Pension Fund Regulatory and Development Authority (PFRDA) norms.
While the proposed relaxations aim to create new business avenues for AMCs, Sebi emphasized that several guardrails would remain in place to mitigate potential conflicts of interest and ensure clear ring-fencing of activities.
Currently, Regulation 24(b) of the MF Regulations limits AMCs to managing and advising pooled assets such as mutual funds, offshore funds, insurance, pension, and provident funds, along with certain foreign portfolio investors.
The proposed amendments are now open for stakeholder comments and are expected to further liberalize India’s asset management landscape, enhancing AMCs’ ability to serve a broader set of investors globally.
