What is SEBI proposing to do with mutual fund expense ratios?

SEBI has proposed lowering the Total Expense Ratio (TER) caps for mutual funds, with a 2.1% cap for schemes with AUM up to ₹500 crore and a 0.9% cap for schemes with AUM exceeding ₹50,000 crore.

How does the mutual fund industry body AMFI view SEBI's proposal?

AMFI believes the proposed 1.2% gap between the TER caps for small and large funds is "too steep" and could disadvantage larger mutual funds if approved.

What changes is AMFI likely to suggest to SEBI's proposal?

AMFI is expected to argue for applying TER regulations only from an AUM size of ₹2,000 crore, rather than ₹500 crore as proposed. AMFI also wants a more gradual decrease in TERs based on fund size and higher brokerage paid by mutual funds.

Home / Business and Economy / AMFI Challenges SEBI's Proposed Mutual Fund Fee Cuts as 'Too Steep'

AMFI Challenges SEBI's Proposed Mutual Fund Fee Cuts as 'Too Steep'

17 Nov

•

Summary

SEBI proposes TER cap of 2.1% for funds under ₹500 crore, falling to 0.9% for funds over ₹50,000 crore
AMFI believes the 1.2% gap is "too steep" and could disadvantage larger funds
AMFI likely to argue for higher brokerage and gradual TER reductions

AMFI Challenges SEBI's Proposed Mutual Fund Fee Cuts as 'Too Steep'

As of November 17th, 2025, the Securities and Exchange Board of India (SEBI) has proposed a significant overhaul of the mutual fund expense structure, including lower base Total Expense Ratio (TER) slabs for open-ended schemes. However, the Association of Mutual Funds in India (AMFI) is now preparing to submit its response, suggesting that the proposed cuts could disrupt fund launches and the mutual fund distribution ecosystem.

According to sources, SEBI's proposal to cap TERs at 2.1% for schemes with assets under management (AUM) up to ₹500 crore, while reducing it to just 0.9% for schemes with AUM exceeding ₹50,000 crore, is considered "too steep" by AMFI. The industry body believes this 1.2% gap could disadvantage larger mutual funds if approved.

AMFI is likely to argue that TER regulations should only apply from an AUM size of ₹2,000 crore, rather than the proposed ₹500 crore. The association also believes the proposed gradation of TERs, decreasing with fund size, should be more gradual at present. Additionally, AMFI is expected to seek higher brokerage paid by mutual funds compared to the 2 basis points currently proposed by SEBI.

Disclaimer: This story has been auto-aggregated and auto-summarised by a computer program. This story has not been edited or created by the Feedzop team.