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Sebi Overhauls Expense Charge Provision For Mutual Funds


On Friday market watchdog SEBI allowed an additional extra expense of 30 basis points to be charged to mutual funds for incentivizing its distribution in all of the cities excluding the top 30 as against cities beyond top 15 so far.

 Sebi Overhauls Expense Charge Provision For Mutual Funds

In the circular, the Securities and Exchange Board of India (Sebi) said that "Since more than five years have elapsed and on review, it is now decided that the additional TER of upto 30 basis points would be allowed for inflows from beyond top 30 cities instead of beyond top 15 cities".

Earlier in the year 2012, SEBI allowed such total expense ratio or TER on fund inflows towards mutual funds from cities beyond top 15 cities referred as B15 cities so as to increase their penetration in such cities and towns.

B15 cities are the ones beyond these top 15 cities namely Ahmedabad, Baroda, Bengaluru, Chandigarh, Chennai, Hyderabad, Jaipur, Kanpur, Kolkata, Lucknow, Mumbai (including Thane and Navi Mumbai), New Delhi (including NCR), Panjim, Pune and Surat.

Total expense ratio is a percentage amount charged towards expenses such as management and administrative charges from the scheme's corpus.

The new provision shall come into effect from April 1, 2018.

Additionally, SEBI said that AMCs shall not be eligible to charge additional expenses of upto 0.2% from investors in the daily average net assets on MFs. The clause shall be applicable to mutual funds including closed ended on which exit load is not charged.

The circular from SEBI further to this effecr said " is clarified that mutual fund schemes including close ended schemes, wherein exit load is not levied/not applicable, the AMCs shall not be eligible to charge the.. additional expenses (0.20 percent of daily net assets of the scheme) for such schemes".


All of the ongoing mutual fund schemes that include closed ended ones on which exit load is not charged shall be discontinued with immediate effect.

With Inputs From PTI

Story first published: Saturday, February 3, 2018, 11:55 [IST]
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