The Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey announced that direct mutual fund plans will be the default choice on digital platforms of asset management companies starting November 1. This change aims to streamline investment options for consumers, making direct plans more accessible while ensuring that investors are aware of their choices.

Direct and regular mutual fund plans invest in identical schemes and maintain the same portfolio. The primary distinction lies in distribution costs, with direct plans being purchased without a distributor, resulting in lower expense ratios. This reduction in costs could significantly influence investors’ returns over time.

Although investors will still have the option to select regular plans, they will need to be informed of the higher expense ratios associated with these choices. Pandey emphasised the importance of making investment decisions with full awareness of the costs involved and the risks associated with various options.

Focus on Compliance and Foreign Investment

Pandey addressed the ongoing concerns regarding foreign portfolio investors (FPIs) and their investment decisions in Indian markets. He noted that factors such as taxes, currency fluctuations, market liquidity, and compliance costs play a crucial role in their investment choices. Investors often evaluate their potential returns after accounting for these variables before comparing them with other markets.

The SEBI Chairman indicated that the regulator would assess whether Indian market participants face higher compliance costs compared to their counterparts in other emerging and developed markets. He stated that the aim is to ensure that regulatory requirements do not impose unnecessary financial burdens on investors.

In line with this, SEBI plans to issue a consultation paper to gather feedback on existing compliance requirements. Pandey highlighted the need for regulations to evolve alongside technological advancements and market practices, suggesting that outdated rules may inadvertently increase costs without enhancing oversight.

Regulatory Changes and Investor Protection Initiatives

SEBI is collaborating with the Reserve Bank of India (RBI) to simplify the onboarding process for foreign investors in Indian markets. Pandey mentioned that the regulator is exploring ways to digitise compliance processes, thereby reducing barriers for investors. This initiative includes reviewing disclosure requirements and concentration norms that may hinder investment.

Additionally, SEBI is reassessing the framework for initial public offerings (IPOs) and small and medium enterprise (SME) listings. Pandey pointed out that India led the world in the number of IPOs in 2025, indicating a robust primary market. However, he believes there is potential for more companies to raise capital through stock exchange listings.

To facilitate this, he suggested that industry associations could play a role in identifying promising businesses and assisting them in the listing process. SEBI is also working on improving IPO disclosures to ensure they are comprehensible for the average investor, aiming to enhance transparency in the market.

Pandey also addressed the issue of fraudulent investment schemes circulating on messaging platforms like WhatsApp and Telegram. He warned that these scams lure investors with unrealistic promises of returns. In response, SEBI has introduced a verification tool called SEBI Check, allowing investors to confirm the legitimacy of bank accounts and payment methods linked to regulated entities.

Moreover, SEBI is collaborating with Google to display verified labels for trading applications on the Google Play Store, aiming to protect investors from misleading financial influencers and fraudulent schemes.

Long or Short, get news the way you like. No ads. No redirections. Download Newspin and Stay Alert, The CSR Journal Mobile app, for fast, crisp, clean updates!

App Store – https://apps.apple.com/in/app/newspin/id6746449540

Google Play Store – https://play.google.com/store/apps/details?id=com.inventifweb.newspin&pcampaignid=web_share