The Securities and Exchange Board of India i.e. SEBI has completely abolished the transaction charge given to mutual fund distributors. This decision has been implemented with immediate effect, so that asset management companies (AMCs) will no longer make such additional payments. According to PTI news, the decision has been taken after public counseling in May 2023 and talks with the industry in June 2025.
What arrangement did Sebi give
According to the market regulator SEBI, the distributors were given transactions charge for investing ₹ 10,000 or more under the arrangement implemented so far. The rule was included in the Master Circular of 27 June 2024. However, after the new review, SEBI found that distributors, who play the role of AMC agent, should be paid directly as commission or fee, not through transaction charge. On this basis, the relevant provisions of Master Circular have now been completely removed.
Transparency in the industry will be encouraged
SEBI believes that this change will promote transparency in the mutual fund industry and simplify the distributors’ payment system. This circular has been issued with the objective of promoting the interests of investors, promoting and regularizing the interests of investors, using the powers provided under Regulation 52 (4A) of Section 11 (1) of the Securities and Exchange Board of India Act, 1992, 1996.
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