SEBI Working Group on Mutual Fund Distributors and Investment Advisers in Final Stages of Submitting Report, Says ED Manoj Kumar — September 11, 2026

The Securities and Exchange Board of India (SEBI) is nearing the completion of its review aimed at settling longstanding friction and regulatory overlaps between mutual fund distributors (MFDs) and registered investment advisers (RIAs). Speaking at the Moneycontrol Mutual Fund Summit 2026, SEBI Executive Director Manoj Kumar stated that the dedicated working group examining the segment is at the final stages of submitting its recommendations.

Kumar noted that the market regulator has engaged closely with industry associations to design a balanced and cohesive ecosystem. Once the recommendations are submitted and adopted by SEBI, the regulator expects a "harmonious construct" between distributors and advisers, stressing that both channels are indispensable for accelerating retail financial inclusion in India.

Resolving Overlaps and Driving Financial Inclusion

The initiative builds upon the working group setup announced by SEBI Chairman Tuhin Kanta Pandey earlier in March 2026 during an address to the Association of Registered Investment Advisors (ARIA). That panel was mandated to review the regulatory framework governing distributors, align their scopes with RIAs, tackle compliance bottlenecks, and curb unregulated market intermediaries.

Addressing distributors present at the summit, Kumar emphasized the complementary nature of both groups:

"We are working very closely with your associations to see that the conflict between you and investment advisers can be addressed. The working group is almost at a final stage in giving its recommendation. We believe that once the recommendation comes and we adopt it, there will be a very harmonious construct between the two entities, because both are required in this country. Without each other, financial inclusion cannot happen at the pace or depth that we are expecting."

Over the years, MFDs and RIAs have grappled with regulatory distinctions concerning fee structures, execution-only services, and the thin boundary separating product distribution from holistic financial planning. While India's mutual fund industry manages over ₹85 lakh crore in assets, the RIA fraternity has remained relatively small—consisting of around 1,000 registered entities—while distribution has largely been driven by lakhs of individual MFDs.

Push for 50 Crore Investors and Review of MF Lite

Beyond the RIA-MFD framework, Kumar addressed broader structural changes aimed at reshaping the domestic asset management sector over the coming decade. He challenged asset management companies (AMCs) and distributors to expand India's mutual fund investor footprint to 50 crore individuals from the country's population of 150 crore.

Key takeaways from the SEBI address:

• Revamped Mutual Fund Regulations: SEBI has overhauled mutual fund and categorization norms that had been in place for nearly three decades, focusing on ease of doing business, governance, and simpler investor access.
• MF Lite Under Review: Kumar revealed that the proposed "MF Lite" framework—designed to ease entry for passive-only index and ETF managers—failed to draw expected interest, recording no standalone applicants so far. SEBI is analyzing the feedback and reasons behind the subdued industry response.
• PMS Overhaul: The regulator is working with portfolio management service (PMS) providers to modernize PMS regulations, bringing investor protection and trust metrics closer to the mutual fund governance standard.
• Guardrails and Education: SEBI is formulating clear guardrails around the use of celebrities and finfluencers, while developing practical case studies through the Association of Mutual Funds in India (AMFI) to guide distributors on regulatory compliance.

What It Means for Indian Investors

For Indian retail investors, the resolution of overlaps between MFDs and RIAs will bring much-needed clarity on the services being offered. While distributors earn commission-based payouts from fund houses on regular plans, RIAs operate on direct fee-based advisory models without distributor commissions.

By eliminating grey areas in execution and advice, SEBI aims to protect investors from conflicting incentives while ensuring that distribution networks remain economically viable enough to penetrate Tier-2, Tier-3, and rural markets.

Tags: SEBI Mutual Funds AMFI ARIA Wealth Management