The Securities and Exchange Board of India (Sebi) is not opposed to mutual fund research but wants greater transparency from fund houses, said whole-time member Amarjeet Singh. The regulator is also keen on increasing the adoption of real estate investment trusts, green bonds, and municipal bonds, which would strengthen the market.
“We are not against research. It is good for the market and good for investors. We all acknowledge that. We are rooting for more transparency. We don’t like hidden costs,” Singh said at the Confederation of Indian Industry’s Financing Summit 2025.
Last month, Sebi proposed a sweeping overhaul of mutual fund regulations, triggering a wide-ranging debate across the industry. One of the most contentious recommendations was a cap on brokerage and transaction costs currently charged to investors, in addition to the total expense ratio (TER).
TER is the cap on the annual costs that a mutual fund can charge its investors, covering management fees, administrative expenses, brokerage, and other charges related to the fund’s operation. It is deducted from the fund’s returns, which affects what customers actually earn. Sebi recommended reducing brokerage limits from 0.12% (12 bps) to 0.02% for cash market transactions and from 0.05% to 0.01% for derivatives.
Fund houses and MF distributors were unhappy with the recommendation as it threatens to affect their top lines. The deadline for the industry to respond to the consultation paper was 17 November 2025.
Singh said that the regulator is actively discussing the matter with the mutual fund industry, and it remains to be seen what comes of it.
Singh also discussed the regulator’s broader agenda of deepening India’s market architecture, highlighting instruments where the regulator sees significant underutilized potential.
Broader market agenda
On real estate investment trusts (Reits) and infrastructure investment trusts (InvITs), Singh said that while these products are no longer new to the market, investor participation has not scaled in line with expectations.
“They are not so new, they have been around, but we are not seeing enough traction,” he said. “Much more can happen through these instruments.”
Singh stated that some regulatory adjustments may be necessary to encourage broader adoption. “We are looking wherever certain tweaks are required in the regulations to give it a thrust.”
Sebi is simultaneously working to boost participation in India’s municipal bond market, an instrument that has seen few issuances despite its potential to finance civic infrastructure. Singh said the regulator is actively engaging with municipal bodies and state governments.
“We are meeting municipalities. We are visiting state governments, doing outreach, educating them about how this municipal bond can be used,” he said
For municipal issuers and investors, municipal bonds can ensure greater transparency.
“Ideally, if a municipal body raises money through municipal bonds, it will undertake certain financial discipline in terms of reporting financials on time, professionalising activities, improving governance,” he said. “There are a whole lot of benefits, which we are trying to tell municipal bodies to come to the market and raise money.”
Regarding green bonds, Singh stated that issuances have remained muted despite India launching a formal framework in 2017.
“Just about a billion dollars has been raised over the last eight years,” he said.
“Our understanding from the market is that there is a green premium which is missing. And the ‘greenium’, we would like to explore how we can help in the creation of that.”
Sebi is open to suggestions on improving the green bond market, said the WTM.
