Mutual fund Investors: Lower and transparent costs
SEBI has introduced a Base Expense Ratio (BER) that separates statutory levies such as GST and securities transaction tax from actual fund management fees.
The Total Expense Ratio (TER) will now include BER, brokerage, and statutory levies, giving investors a clearer picture of what they actually pay.
Impact for investors
- Lower and clearer all-in costs, especially for small-ticket SIPs starting at a few hundred rupees.
- Reduced chance of mis-selling since statutory charges are now charged on actuals, not bundled.
- Enhanced transparency for both urban and rural households gradually shifting from informal savings to regulated products.
“Lower and clearer all-in costs improve the value proposition of starting SIPs, making it easier for households to invest small amounts while seeing the true cost,” said Arun Raste, MD & CEO, NCDEX.
Aditya Agrawal, CFA, CIO at Avisa Wealth Creators, added that the overhaul is investor-first, improving transparency and net long-term returns.
SEBI has also removed an additional 0.05% exit load charge on certain equity schemes and lowered brokerage caps on cash and derivative transactions. These measures further reduce layered costs, benefiting retail investors.
Retail IPO investors: Easier access and clearer information
SEBI has simplified IPO norms by introducing a concise, standardised Abridged Prospectus, available digitally and via QR codes, replacing lengthy draft documents.
Lock-in compliance for pledged non-promoter shares has also been simplified.
Impact for investors
- Retail investors can make quicker, informed decisions.
- Reduced compliance friction and simpler processes for tracking IPO allotments and restrictions.
“Simplified disclosure norms and relaxed compliance requirements make IPOs more efficient for companies and accessible for investors,” said Swapnil Aggarwal, Director, VSRK Capital.
Aditya Agrawal noted that the digital-first regime allows investors to focus on key information and speeds up participation.
Broader inclusion: Semi-urban and rural households
The reforms are expected to support wider SIP penetration in smaller towns and rural areas through digital onboarding and MF distribution via banking correspondents and cooperatives.
“By charging statutory levies on actuals and simplifying costs, the regime helps small investors avoid disproportionately high charges on small investments,” said Raste.
Swapnil Aggarwal highlighted that these measures strengthen transparency, affordability, and investor confidence in India’s capital markets.
Broker and AMC impact
While these reforms primarily benefit investors, brokers and asset managers may see some operational adjustments:
- Slight reduction in revenue from brokerage caps and removed exit load charges.
- Need to adapt systems for BER calculation and simplified reporting.
Analysts say these impacts are manageable and offset by the broader goal of making mutual funds and IPOs more investor-friendly.
