Speaking at the NJ Partners Business Training 2026 event on August 13, SEBI whole-time member Amarjeet Singh underscored the critical importance of investor trust and ethical conduct for the burgeoning Indian mutual fund industry. Singh cautioned that any growth not built on a foundation of investor confidence would ultimately prove unsustainable.
Rapid Expansion of India's Mutual Fund Sector
Singh highlighted the significant expansion of the Indian mutual fund industry, with assets under management (AUM) reaching approximately ₹85 lakh crore. This marks a substantial increase from ₹10 lakh crore in 2014, representing more than an eight-fold growth in just over a decade. The industry has also seen a surge in participation, with mutual fund folios exceeding 27 crore and unique investors surpassing 6 crore.
The distribution ecosystem has expanded in tandem, with the number of active AMFI-registered distributors rising from 2.4 lakh to 3.4 lakh over the past five years. Notably, around 71% of mutual fund assets held by retail and high-net-worth individual (HNI) investors continue to be channeled through distributors.
Ethical Distribution at the Core
Singh stressed that intense competition and the proliferation of information could pressure distributors to prioritize customer acquisition over the suitability of financial products for investors. He asserted that ethical distribution must remain central to the investor relationship. This involves:
- Fair disclosure of risks and commissions.
- Ensuring product suitability for individual investor needs.
- Sustained engagement with investors beyond the initial point of sale.
- Continuously enhancing capabilities as financial products grow in complexity.
He issued a strong warning against mis-selling, even in cases where investors might not immediately recognize they have been misled. Singh offered a simple yet powerful test: “whether you would make the same recommendation, in the same manner, to a member of your own family.”
Technology's Role and Limitations
While acknowledging the growing role of technology and artificial intelligence (AI) in financial product distribution—improving efficiency, reducing costs, and expanding reach through digital onboarding and mobile platforms—Singh also flagged potential risks. These include challenges related to accountability, transparency, suitability, cybersecurity, and data protection. He specifically cautioned against “AI washing,” where claims about AI capabilities might exceed reality.
“While technology is enabling greater dis-intermediation, it cannot take away the significance of personal human touch,” Singh remarked.
He emphasized that distributors must continue to demonstrate clear and continuing value through a deeper understanding of investor needs and sustained engagement.
SEBI's Proposed Frameworks
Singh also touched upon SEBI's ongoing consultation for a Mutual Fund-only Portfolio Management Services (PMS) framework. This proposed framework would allow investments exclusively in direct mutual fund plans, including ETFs and SIFs, with a suggested minimum investment of ₹25 lakh, half the ₹50 lakh required for conventional PMS.
Additionally, SEBI has simplified the SIF certification framework, enabling distributors with the relevant certification to distribute both mutual funds and SIFs, further streamlining market access.