Mutual Fund Regulator in India | Mutual Fund Market Regulator in India
Securities and Exchange Board of India (SEBI) - SEBI is the primary regulator of mutual fund industry in India. All the mutual funds must register themselves with the SEBI. Mutual Funds are governed under a set of regulations called Securities and Exchange Board Of India (Mutual Funds) Regulations, 1996 which have been designed to protect the investors. Mutual funds can be penalised for violating norms.
In addition to SEBI, mutual funds need to abide by the regulations of following other regulators in a limited manner:
- Reserve Bank of India (RBI) - RBI acts as regulator of sponsors of bank-sponsored mutual funds. Mutual funds who deal in the money market need to get registered with the RBI. Mutual fund is not allowed to bring out a guaranteed/ fixed returns scheme without taking prior approval from RBI.
- Companies Act - Asset Management Company and Trustee Company are subject to the provisions of the Companies Act, 1956.
- Indian Trusts Act - As the mutual funds are formed as a public trusts under the Indian trusts Act, 1882, they have to abide by the provisions of the Indian Trusts Act, 1882.
- Ministry of Finance (MoF) - The MoF is the appellate authority under SEBI regulations. The finance ministry is the supervisor of the SEBI and the RBI. Appeals on the SEBI rulings relating to mutual funds can be made by the aggrieved parties to the MoF.
- Stock Exchange - It is required from the closed-end funds to list their units on a stock exchange. This listing is subject to provisions of the listing regulation of stock exchanges.
Role of SEBI in Mutual Funds
- The primary role of the SEBI is to safeguard the interests of investors and check the smooth functioning of capital markets of India.
- SEBI formulates policies, regulates and supervises mutual funds.
- It governs mutual funds through Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.
- SEBI is also responsible for establishment of mutual funds, their operations, the administration of mutual funds, fees charged by mutual funds and performance of mutual funds.
- SEBI has laid down sigificant rules and regulations to improve transparency, fairness and investor protection in the mutual fund industry.