SEBI has revised the application form for mutual fund registration, introducing a more detailed framework for entities seeking to enter the asset management business. The regulator issued the circular on August 17, 2026, as part of its broader efforts to strengthen the mutual fund regulatory framework and improve the quality of information submitted by prospective fund houses.
The move comes after the recent overhaul of the SEBI (Mutual Funds) Regulations, 2026 and SEBI Intermediaries Regulations.
At present, mutual fund registration involves a two-stage process, with applicants first seeking in-principle approval through Form A and later applying for final registration using Forms C and D. SEBI has now decided to merge these existing forms into a single application form for mutual fund registration.
While the move could reduce duplication and make the application process more streamlined for prospective fund houses, it does not mean regulatory requirements are being diluted. SEBI has clarified that all other conditions prescribed under the Master Circular for Mutual Funds will continue to remain unchanged.
So, what exactly has changed in the registration process, and what does SEBI’s revised single-form approach mean for prospective mutual fund sponsors?
How will SEBI’s new rule impact AMCs?
Existing AMCs will not see much change or impact from this rule, as the new framework is primarily relevant for new mutual fund registrations.
“The bigger impact will be on new entrants, who will now have to demonstrate much more than financial strength before getting approval. SEBI is asking new AMCs to show readiness across governance, technology, cybersecurity, internal controls and compliance. In effect, entering the mutual fund business is becoming easier in terms of the registration process; the standard for getting approval for a new AMC remains high,” commented Shweta Rajani, Head – Mutual fund, Anand Rathi Wealth.
This circular will strengthen the credibility of the mutual fund industry over time.
How will SEBI’s new rule impact consumers?
SEBI has always thought about investors first. And this new rulebook will only bring a more meaningful contribution towards consumers going forward in future.
“The new AMCs that are going to come will now have to have separate grievance handling, complaint history, and all regulatory action and conflict of interest policies even before they receive approval. This shows how much thought SEBI has applied to the entire process to strengthen the governance process of these AMCs that are coming,” Rajani said.
It also shows that we are gearing up for a bigger capital market, as the Mutual fund AUM has grown by around 3-fold in the last five years, rising from Rs 35.32 trillion in July 2021 to a record high of Rs 85.76 trillion by July 2026, according to AMFI data.
What was the earlier rule?
Earlier, mutual fund registration was a two-stage process. Sponsors first submitted Form A for in-principle approval and then Forms C and D for final registration.
The revised framework brings this into a single Form A, but with much deeper checks, including ownership details, five-year complaint history, regulatory records, database checks and detailed technology and business continuity plans.
This will make the mutual fund industry safer at the entry stage because poorly prepared or weakly governed sponsors are less likely to get through. However, registration is only the starting point and the safety of investors ultimately depends on how well an AMC is governed and supervised after it begins operations.
Will SEBI set stricter complaint timelines?
This rulebook is a step to organize the grievance handling process, and maybe there might be inefficiencies in the first few months; however, in the next one year we can expect that the resolutions will be faster and more efficient, Rajani says.
The new framework requires sponsors to disclose their complaint handling process and complaint history at the registration stage. But this does not mean investors will immediately get faster resolution, as the circular does not introduce any new turnaround time standards.
Will AMC complaint data really help investors?
Disclosing five-year complaint history is a meaningful step because it gives SEBI a better view of how a sponsor has dealt with investors in the past.
“But for retail investors, the value will depend on how easily this information can be understood. Raw complaint numbers can be misleading because large AMCs will naturally have more complaints as compared to small AMCs,” said Rajani.
Is Rs 150 crore AMC net worth enough?
SEBI has provided two routes for a sponsor to qualify. Route 1 requires at least 5 years of financial services experience, consistent profitability, and an average net annual profit of Rs 10 crore over 5 years. Route 2 allows a sponsor to qualify through an experienced management team with a combined 30 years of relevant experience and Rs 150 crore of AMC net worth locked in for 5 years.
“The Rs 150 crore net worth requirement is a reasonable starting point, but it should not be seen as a guarantee that a new AMC is financially or operationally strong. When an AMC can potentially manage thousands of crores of investor money, Rs 150 crore is still a modest cushion. So this is not a guarantee of operational strength or fund performance,” commented Rajani.
Ultimately, technology, governance and the quality of investment management will matter far more.
How should investors evaluate a new AMC?
For a new AMC, investors should avoid rushing in simply because the fund or the brand is new. It is better to allow the AMC to build a track record of at least 2 to 3 years and see how its investment process works across different market conditions.
While choosing a fund from any AMC, investors should look at the experience of the fund managers, the sponsor’s background, regulatory history, and how clearly the AMC communicates its investment philosophy.
Apart from this, investors should check for the AMC’s concentration in their portfolio and avoid concentrating too much of their funds with one fund house.
AMC conflict disclosures: Why do they matter?
If a sponsor has businesses in banking, insurance, broking or other financial services, there could be situations where investment decisions made by the AMC may benefit the parent group rather than the fund’s investors.
For example, an AMC whose sponsor also runs a bank might over-allocate to that bank’s bonds or stocks.
SEBI’s new form requires AMCs to disclose their conflict of interest policies, group entities and insider trading policies.
“For investors, the practical way to assess this is to read the Scheme Information Document and understand the sponsor’s group businesses and check the fund’s exposure in group companies. If the exposure looks unusually high, it deserves closer attention of investors,” said Rajani.
Does the new framework curb mis-selling?
The new framework is mainly about making sure that credible and well-governed entities enter the mutual fund industry, rather than regulating how products are sold.
Mis-selling usually happens at the distribution level, where unsuitable products can be pushed to investors without understanding or considering the risk and return requirements of the investor.
According to Rajani, the requirement for new AMCs to disclose their customer onboarding processes is a positive step because it shows that investor suitability is being considered from the beginning.
What will investors gain?
The most tangible change will be the higher quality of new AMCs entering the market, but this will take time to become visible.
A new AMC will now have to demonstrate its financial strength, governance, technology readiness, grievance handling process, and regulatory track record upfront. So, when a new fund house enters the market, investors can have greater comfort that it has cleared a more detailed regulatory check before getting approval.
And, directionally, it makes the industry more consumer-friendly because investor protection is now being considered even before an AMC gets registered.
However, investors also need clearer information on an AMC’s complaints, regulatory record, fund manager changes, and governance. This will help them judge the quality of an AMC, rather than looking only at the fund’s past returns.
Disclaimer: This article is for informational purposes only and should not be construed as investment, financial, tax, or legal advice. Any illustrations, examples, or return projections used in this article are for explanatory purposes only and do not guarantee actual investment outcomes. The views and opinions expressed by experts quoted in this article are their own and should not be considered investment recommendations. Readers should consult a qualified professional before making any financial decisions.
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