Regulations in AMC Industry in India

AMC Industry in India is regulated by SEBI under SEBI(Mutual Funds) Regulations, 1996. All the rules, regulations and actions for AMCs are monitored by SEBI. To operate in the space, adequate license needs to be obtained from SEBI. SEBI operates with the purpose of safeguarding investor interests. There are various regulations by SEBI that affect Mutual Funds. Let us look at few of them.

Key Points for Mutual Funds Registration:
1. All the Mutual funds should get registered as Trust under the Indian Trust Act, 1882
2. A separate AMC should be registered.
3. The net worth of the AMC must be 5 Crore.
4. The sponsor should contribute at least 40% to the Net Worth of the AMC Should be carrying on business 5. in financial services for a period of not less than 5 years & the net worth should be positive.
6. Appointment of Custodian in order to keep custody of Gold & Gold related Instruments is in terms of the 7. regulations prescribed
8. The Main Objects of the MOA of the sponsor company should permit the Mutual Fund Activities

Introduction of Risk-o-Meter, indicating the level of risk in any specific mutual fund scheme. The circular also dictates that the product label shall be: (his new mandate shall come in force with effect from January 1, 2021)
1.Disclosed on the front page of the initial offering application form, Scheme Information Documents (SID) and Key Information Memorandum (KIM).
2. Disclosed on the common application form – along with the information about the scheme.
3. Placed in proximity to the caption of the scheme and should be prominently visible.
4. Disclosed on scheme advertisements

SEBI has banned from charging upfront fees from client in PMS

A recent SEBI guideline now makes it mandatory for mutual funds to declare their full debt portfolio on a fortnightly basis on their website versus earlier requirement of monthly basis.

Multi-cap regulation by SEBI call for at least 25 per cent of the portfolio to be invested in large caps, mid-caps and small caps each. 
Extract Source – Mutual Funds Investor FAQs

We can see the kind of restrictions and exercise that SEBI has over the industry. This is the main regulatory authority in the Industry. AMCs are affected by AMFI (Association of Mutual Funds in India) and MCA (Ministry of Corporate Affairs).

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Major Trends in AMC Industry in India

Major Trends in AMC industry in India are-
1. Impact of Demonetization – Catalyst for Financial Assets.
2. Continuous Rise in Participation through SIPs
3. Rise in Share of Financial Assets against physical assets.
4. Shift from Distributor to Direct Channel
5. ESG Funds starting to enter market.
6. Passive Funds and ETFs gaining market share
7. Rise of Individual Investors in AUM.
8. Bank backed AMCs gaining AUM.


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