Mutual Fund News for September 2026
SEBI Proposes Overhaul of Settlement Framework
The Securities and Exchange Board of India (SEBI) has proposed replacing the 2018 settlement regulations with a new framework aimed at reducing litigation and enabling faster resolution of enforcement proceedings.
The proposed reforms include a simpler formula for settlement amounts, a fast-track mechanism for cases involving amounts up to Rs. 10 lakh, issuance of settlement notices before show-cause notices, a 90-day window for filing settlement applications and another opportunity to settle at a later stage if an earlier application was rejected.
SEBI’s review of settlement applications filed over the past two years found that proposed settlement amounts were, on average, around eight times higher than the penalties eventually imposed. Under the new framework, this gap is expected to reduce to around four times.
The regulator has also proposed a revised calculation method considering the stage of proceedings, nature of violation, aggravating and mitigating factors, and applicable base amount.
SEBI Proposes Changes to Online Dispute Resolution Framework
The Securities and Exchange Board of India (SEBI) has proposed reforms to the online dispute resolution (ODR) framework for the securities market to improve efficiency, reduce timelines and strengthen enforceability.
A key proposal involves shifting responsibility for dispute resolution management from ODR institutions to market infrastructure institutions (MIIs), including stock exchanges and depositories. MIIs would oversee the technology-driven process while using their regulatory oversight over intermediaries and listed entities.
SEBI has suggested changes to the appointment process for arbitrators and conciliators, with MIIs selecting candidates from empanelled panels based on party preferences.
The regulator has also proposed direct escalation of unresolved SCORES complaints to the conciliation stage under ODR, reducing timelines by 21 days.
For alternative investment fund (AIF) investors, SEBI has suggested allowing dispute resolution mechanisms based on existing contracts and extending legal protections across different fund structures.
BSE Launches Total Market Index Covering 98% of Listed Market Capitalisation
BSE Index Services Pvt. Ltd., a wholly owned subsidiary of BSE, has launched the BSE Total Market Index to track companies representing 98% coverage of the BSE AllCap Index based on total market capitalisation.
The index has a base value of 1,000, with the first value date of September 16, 2005. It will be reconstituted semi-annually in June and December.
Mr. Ashutosh Singh, MD & CEO of BSE Index Services Pvt. Ltd., said, “A true total market benchmark should never be static. The BSE Total Market Cap Index is a future ready benchmark that is not capped by a fixed number of constituents, it expands with India’s capital markets, maintaining coverage of at least 98% of BSE All Cap universe or a minimum of 1,000 stocks.”
The index can be used for ETFs, index funds, PMS strategies, mutual funds and portfolio benchmarking.
SEBI Flags Rs. 87,124 Crore as Difficult-to-Recover Dues in FY26
The Securities and Exchange Board of India (SEBI) identified around Rs. 87,124 crore as difficult-to-recover (DTR) dues in FY26, an increase of nearly 12% from around Rs. 77,800 crore in the previous year.
According to SEBI’s annual report, the number of such cases increased to 942 from 889. Around Rs. 84,963 crore of the outstanding amount relates to 310 cases pending before various courts and tribunals.
The regulator recovered around Rs. 341 crore during FY26, compared with Rs. 504 crore in FY25.
SEBI’s income from fees and other charges increased nearly 10% to Rs. 2,563 crore in FY26 from Rs. 2,334 crore in the previous year. Regulatory fees from stock exchanges contributed the highest revenue at Rs. 1,349 crore, followed by custodians of securities and registration fees from equity and derivatives segment members.
SEBI Plans AI-Based Multilingual Investor Awareness Campaign
The Securities and Exchange Board of India (SEBI) plans to launch an artificial intelligence-enabled multilingual investor awareness campaign through WhatsApp and other digital platforms as part of efforts to improve financial literacy and simplify regulations.
The regulator’s FY26 annual report outlines initiatives including a nationwide financial literacy programme under Project Jagrook, simplified nomination norms for demat accounts and mutual fund folios, a single-window clearance mechanism for intermediaries and the proposed SEBI Setu portal.
“We will continue to focus on identifying and removing regulatory redundancies, simplifying procedural requirements and leveraging technology to ease the compliance burden,” SEBI Chairman Tuhin Kanta Pandey said.
He added, “As the Indian securities market continues to evolve in scale and complexity, SEBI remains committed to fostering a proactive, technology driven regulatory landscape centred on ease of doing business, market deepening and preserving market integrity.”
LIC Mutual Fund Plans Rs. 500 Crore Specialised Investment Fund Launch
LIC Mutual Fund is preparing to launch a Specialised Investment Fund (SIF) with a target corpus of Rs. 500 crore, subject to regulatory approval and market conditions.
The SIF category requires a minimum investment of Rs. 10 lakh and allows investors exposure to long-short strategies and unhedged derivatives.
RK Jha, MD and CEO of LIC Mutual Fund, said the company expects to launch the product in October. He said the fund house’s Assets Under Management increased from Rs. 16,526 crore in March 2023 to Rs. 50,875 crore as of July 31, representing a growth of 208%.
The company aims to double its AUM to around Rs. 1 lakh crore by March 2027, supported by systematic investment plans, bank partnerships and corporate tie-ups.
Mutual Fund SIP Inflows Double in Three Years
Mutual fund Systematic Investment Plan (SIP) inflows reached Rs. 31,961 crore in July 2026, registering 12% year-on-year growth, according to Franklin Templeton India Mutual Fund.
The number of SIP accounts increased to 10.63 crore in July 2026, up 12.5% compared with the previous year. The average SIP size declined marginally to Rs. 3,007 per month from Rs. 3,012.
Flexicap funds attracted the highest inflows over the past 12 months at Rs. 91,707 crore, followed by multi-asset allocation funds at Rs. 68,375 crore.
Midcap funds received Rs. 6,192 crore and small-cap funds attracted Rs. 7,768 crore during July.
Beyond the top 30 cities, mutual fund Assets Under Management grew at a 23% CAGR over five years, compared with 19% growth in top 30 cities.
Equity and Passive Funds Drive Mutual Fund Growth Over Five Years
Investor preference in mutual funds has shifted towards equity and passive products over the past five years, with these categories emerging as major drivers of growth, according to ICRA Analytics.
Total mutual fund Assets Under Management increased from Rs. 35.32 lakh crore in July 2021 to Rs. 85.76 lakh crore in July 2026, registering growth of around 143%.
Equity fund AUM increased by around 224% to Rs. 38.40 lakh crore, while debt fund AUM grew 27% to Rs. 19.46 lakh crore during the period.
Passive fund AUM, including exchange traded funds and index funds, increased around 324% from Rs. 3.57 lakh crore to Rs. 15.15 lakh crore.
The number of mutual fund folios also increased from 10.55 crore to 28.09 crore, with passive fund folios rising more than five times.
Invesco Mutual Fund Launches Pharma and Healthcare Fund
Invesco Mutual Fund has launched the Invesco India Pharma and Healthcare Fund, an open-ended equity scheme focused on pharma, healthcare and allied sectors.
The new fund offer (NFO) is open for subscription and will close on September 1.
The fund aims to benefit from India’s expanding healthcare ecosystem, supported by rising healthcare access, increasing insurance penetration, favourable demographics, pharmaceutical capabilities and innovation-led opportunities.
The scheme will invest across pharmaceutical companies, hospitals, diagnostics, contract development and manufacturing organisations, contract research organisations, medical devices, healthcare services, insurance and other allied healthcare segments.
India’s healthcare sector is supported by factors including higher healthcare expenditure, ageing population, lifestyle diseases, expanding health insurance coverage, infrastructure development and global outsourcing opportunities. These trends are expected to create long-term growth opportunities across the healthcare value chain.
SEBI Simplifies Mutual Fund Registration Process
The Securities and Exchange Board of India (SEBI) has simplified the mutual fund registration process by replacing multiple application forms with a single consolidated form.
Currently, mutual fund registration applications are processed in two stages. The first stage involves obtaining in-principle approval for the sponsor or applicant to establish a mutual fund, followed by final registration.
At present, applicants submit Form A for in-principle approval, while Forms C and D are required for final registration.
The revised process aims to reduce procedural complexity and make registration more efficient for applicants seeking to establish mutual funds.
SEBI’s move is part of broader efforts to streamline regulatory processes, reduce compliance burden and improve ease of doing business in the securities market.
