Speaking to ET Now, Chaturvedi said that the proposed consultation paper on total expense ratios (TER) and brokerage limits would result in negligible changes in commission structures but would ultimately lead to better investor outcomes through lower operating costs.
“The proposed 15 basis point reduction in base TERs, when adjusted for GST and other exclusions, should be revenue-neutral for both AMCs and distributors,” Chaturvedi explained. “The only difference could arise from the removal of the additional five basis points that was earlier charged in lieu of the exit load.”
Negligible impact on AMCs, normalization possible
Chaturvedi clarified that while the exit-load-linked five basis points may create a one-time normalization effect between asset managers and distributors, the overall business model will remain stable.
“For regular operations, there’s no major impact or need for renegotiation. Both AMCs and distributors will continue to operate profitably under the new norms,” he added.
He also noted that the industry has consistently adapted to regulatory reforms over the past decade while maintaining growth momentum.
Lower brokerage, higher investor benefit
The SEBI consultation paper proposes a 10-basis-point reduction in brokerage on mutual fund trades, aiming to enhance transparency and pass cost savings to investors.Chaturvedi said that such measures are in line with the regulator’s intent to ensure that as the mutual fund industry scales up, investors share the benefits of efficiency gains.
“Every time the industry achieves economies of scale, SEBI ensures those benefits flow to investors,” he noted. “Over the years, we’ve seen reforms in TERs, entry loads, and exit loads — all of which have improved investor value.”
Reforms to continue as industry expands
India’s mutual fund industry has grown threefold from ₹25 lakh crore in 2018 to ₹75 lakh crore currently, and Chaturvedi believes structural reforms will continue as the sector scales further.
“We’re still in a growth phase and could expand significantly over the next 5–15 years. Reforms like these ensure long-term sustainability and investor trust,” he said.
He added that the latest brokerage reduction could enhance investor returns by marginally lowering fund expenses without impacting AMC profitability.
Investor-centric regulation driving growth
According to industry observers, SEBI’s ongoing focus on fee transparency and investor protection has played a crucial role in deepening mutual fund participation across retail and institutional investors.
“The proposed reduction in trade costs is meaningful and aligns with SEBI’s vision of ensuring investors get maximum value for their money,” Chaturvedi emphasized.
The final impact will depend on the regulator’s implementation framework once the consultation process concludes.