SEBI to make direct mutual fund plans the default option

The Securities and Exchange Board of India (SEBI) will mandate that asset management companies (AMCs) set direct mutual fund plans as the default option on their digital platforms. This change, announced by SEBI Chairperson Tuhin Kanta Pandey, is scheduled to take effect on November 1.

Direct plans allow investors to invest directly with fund companies without distributors or agents, resulting in a lower expense ratio compared to regular plans. Under the new regulation, if an investor chooses a regular plan, they will be explicitly notified that the expense ratio is higher. The move aims to ensure investors are fully informed of costs to make better-informed decisions. Regular plans will remain available for those who prefer them.

Additionally, SEBI is reviewing regulations regarding Initial Public Offerings (IPOs) and Follow-on Public Offerings (FPOs), including rules for Small and Medium Enterprise (SME) IPOs. The regulator intends to strengthen oversight on how companies utilize funds raised through these offerings to increase accountability and protect investor interests.