The Securities and Exchange Board of India (Sebi) has set up a working group to review overlaps in regulations governing mutual fund distributors (MFDs) and registered investment advisers (RIAs), as the regulator looks to streamline rules in the fast-growing advisory ecosystem.
“A working group has been set up to review the extant regulatory framework of MF distributors and harmonize overlap, if any, between MFDs and IAs,” said Sebi chairman Tuhin Kanta Pandey at ARIA Aspire 2026 on Monday.
While mutual fund distributors are permitted to distribute fund products, they often make recommendations to clients, blurring the distinction between distribution and investment advice. The review aims to clarify regulatory boundaries and ensure consistency across the advisory framework.
Sebi is also preparing a common advertising code and a penalty structure for investment advisers as part of broader efforts to strengthen the ecosystem.
“A common advertisement code for all intermediaries is being prepared. This should reduce operational challenges and improve consistency,” Pandey said. He added that the regulator is also working out a ‘light-touch penalty structure’ for investment advisers to ensure transparency and fairness.
The moves are part of Sebi’s effort to make the investment advisory ecosystem more ‘trusted and accessible’ as India’s investor base expands rapidly.
The regulator is also developing a digital platform, Sebi SETU, that will provide end-to-end regulatory guidance for investment advisers, from registration to ongoing compliance, through a simplified interface.
India currently has about 1,000 registered investment advisers, of which around 470 are individuals, while the rest are institutional entities. The number of RIAs has declined since 2021, a trend the regulator views as a concern.
“As India’s investor base expands rapidly, our market needs more regulated advisers,” Pandey said.
Without enough regulated advisers, he warned, the gap is increasingly being filled by unregulated voices on social media.
“Otherwise, the gap will be filled by unregulated voices—like finfluencers—who present opinion as expertise and speculation as strategy,” he said.
Sebi has already stepped up action against financial influencers offering unregistered investment advice. One of the most prominent cases involved influencer Avadhut Sathe and his trading academy.
In December, the market regulator ordered Sathe to disgorge over ₹500 crore, alleging he used live trading data to provide stock tips and unregistered investment advice to students.
The regulator’s investor survey shows that nearly 62% of prospective investors are influenced by finfluencers, a trend Pandey said can distort investor behaviour and weaken market discipline.
