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Published on 4 April 2025

SEBI's New Circular on Mutual Fund Investor Education Initiatives

SEBI Circular on Investor Education and Awareness Initiatives

On February 20, 2025, the Securities and Exchange Board of India (SEBI) issued a circular detailing the obligations for investor education and awareness initiatives that mutual funds must adhere to. This directive aligns with Chapter 10 of SEBI’s Master Circular released on June 27, 2024, which mandates that Asset Management Companies (AMCs) allocate a minimum of 2 basis points from their daily net assets for investor education initiatives. This allocation is to be accounted for within the total expense ratio limit as stipulated by Regulation 52 of the SEBI (Mutual Fund) Regulations, 1996.

SEBI is committed to enhancing investor education through various initiatives, potentially including approved financial inclusion programs. This demonstrates SEBI's efforts to bolster investor knowledge and awareness in the market. The circular reinforces SEBI's authority under Section 11(1) of the SEBI Act, 1992, focusing on investor protection and the oversight of the securities market. Complete details of this circular are available on the SEBI website in the “Legal — Circulars” section.

Circular Details:

Recipients:

  • All Mutual Funds
  • All Asset Management Companies (AMCs)
  • All Trustee Companies / Boards of Trustees of Mutual Funds
  • Association of Mutual Funds in India (AMFI)

Key Provisions:

  1. Allocation Requirement: AMCs must allocate at least 2 basis points of their daily net assets annually for investor education and awareness initiatives, as mandated by the Master Circular.
  2. Educational Initiatives: Initiatives categorized under ‘Investor Education and Awareness’ may include programs aimed at promoting financial inclusion, contingent on SEBI's approval.
  3. Regulatory Framework: This circular is issued under the authority of Section 11(1) of the SEBI Act, 1992, alongside the relevant provisions of Regulation 52 of SEBI (Mutual Funds) Regulations, 1996, aimed at ensuring investor protection and enhancing market regulation.
  4. Access to Circular: The circular is accessible online at sebi.gov.in in the “Legal — Circulars” section.
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