Direct mutual fund plans will become the default option on asset management companies’ digital platforms from November 1, 2026, Securities and Exchange Board of India Chairman Tuhin Kanta Pandey said. Investors choosing regular plans will have to be informed that those plans have higher expense ratios.

Key Takeaways

  • The change applies to asset managers’ digital platforms and retains a choice of regular plans.
  • SEBI is also reviewing public-offering rules and expanding its use of artificial intelligence in supervision.

What direct mutual fund plans mean for investors

Pandey announced the default change at a Diwali event. The account of his remarks did not specify what default applied previously, or describe the detailed implementation requirements.

SEBI’s explanation of regular and direct mutual funds says the underlying portfolio remains the same, but costs differ. Regular plans are purchased through intermediaries and include commissions in their expense ratios; direct plans are purchased from the asset manager without those intermediaries.

IPO rules and other reviews

Pandey said SEBI will review the frameworks for main-board initial public offerings and follow-on public offers, SME IPOs and the Innovators Growth Platform. The review is intended in part to improve emerging companies’ access to public capital; he did not announce completed rule changes in these areas.

The regulator is also examining net settlement for mutual fund transactions and considering whether listing timelines for real estate and infrastructure investment trusts should align with those for equities.

Technology and investor awareness

SEBI plans to extend its Radar tool, which checks mutual fund and distributor advertisements, to other intermediaries. It is also developing an in-house AI system to analyse compliance reports from portfolio managers and asset managers.

Pandey said a SEBI investor survey found that 63% of households were aware of at least one securities market product, while around 9.5% participated in the markets. Among investors, 36% had moderate or high levels of market knowledge.

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