SEBI has introduced stricter and more transparent rules for mutual funds and index providers. The aim is to improve governance, strengthen accountability, and protect investor interests in India’s growing index-based investment market.
Contents
New Rule for “Significant Index” Classification
SEBI has decided that any index-based mutual fund scheme with an average Assets Under Management (AUM) of more than ₹20,000 crore for six consecutive months will now be classified as a “Significant Index.”
This classification will be reviewed every six months, based on data ending 30 June and 31 December.
Once an index is placed in this category, it will remain there unless its tracked AUM falls below the required level for three consecutive years.
Why SEBI Introduced These Changes
These new rules come after the implementation of the SEBI (Index Providers) Regulations, 2024. These regulations are designed for companies that manage large and widely used market indices.
SEBI says that as index-based investing grows in India, index providers must also take greater responsibility. Because of this, stronger rules and better monitoring have become necessary.
Which Indices Are Considered “Significant”
SEBI has also released a preliminary list of major indices under this category. It includes well-known benchmarks such as:
BSE Sensex
Nifty 50
Nifty 500
BSE 500
These also cover sector-based, debt, and hybrid indices. These indices are managed by organisations like NSE Indices Limited, BSE Index Services Private Limited, and CRISIL.
New Compliance Rules for Index Providers
SEBI has made it mandatory for index providers offering “significant indices” to register with the regulator within six months.
However, indices already approved by the Reserve Bank of India (RBI) will not be affected by this rule.
Existing providers will be allowed to continue operations during the transition period, but they must apply for registration within the given deadline.
Separate Entity Requirement for Transparency
SEBI has also directed that companies already registered in other categories and also running index services must create a separate legal entity for their index business within two years.
This step is aimed at separating index operations from other businesses to reduce conflicts of interest and improve transparency.
Additionally, grievance redressal rules will apply only to significant indices operated by SEBI-registered providers.