Market regulator Sebi proposes MF Lite regulations for passive AMCs

On Monday, the Securities and Exchange Board of India (SEBI) proposed new, lighter regulations for 'passive-only' mutual fund (MF) houses, known as the MF Lite framework. This initiative aims to reduce compliance burdens and foster innovation for funds focusing on ETFs and index funds. Under these regulations, passive-only asset management companies (AMCs) will face lower net worth and profitability requirements compared to traditional AMCs. Existing firms can also spin off their passive fund operations into separate entities. The new rules include reduced reporting requirements, lower minimum net worth criteria for AMCs, and increased transaction limits through associated brokers.