SEBI Chief Calls on Mutual Fund Trustees to Strengthen Oversight, Guard Investor Trust
As the Indian mutual fund (MF) industry enters a new era of scale, complexity and technological transformation, Securities and Exchange Board of India (SEBI) chairman Tuhin Kanta Pandey on Monday urged mutual fund trustees to reinforce governance standards and exercise independent, proactive oversight.
Speaking at the ‘Leadership Dialogue for Trustees of Mutual Funds’, Mr Pandey says the strength of the country’s capital markets lies not merely in regulation or returns, but in ‘the trust that the system will always act in the best interest of investors’.
He described MF trustees as the ‘guardians of India’s mutual fund ecosystem’ and urged them to maintain the highest standards of fiduciary care and ethical conduct. “Your role is not ceremonial—it is fiduciary, moral and institutional. Independence, oversight, and accountability must be lived values, not just regulatory terms,” he emphasised.
Mr Pandey highlighted the industry’s impressive expansion, noting that assets under management (AUM) have surged six-fold over the past decade—from Rs12 lakh crore to Rs75.6 lakh crore as of September 2025. The number of unique mutual fund investors has climbed from one crore to 5.6 crore, with 60% of total assets now held by individuals and 18% of these coming from beyond the top 30 cities.
Monthly systematic investment plan (SIP) inflows, the SEBI chief says have risen from Rs3,000 crore in 2016 to Rs28,000 crore, reflecting growing retail participation. “Mutual funds today are not just a financial product; they are a social enabler—helping millions of Indians participate in capital formation, manage risk, and achieve their financial goals,” Mr Pandey says.
On regulatory priorities, the SEBI chairman outlined several initiatives aimed at deepening accountability. SEBI has delineated the roles of trustees and asset management companies’ (AMC) boards, with trustees required to conduct independent evaluations, while AMC boards must form a unitholder protection committee.
He says MF trustees must ensure that AMCs have robust mechanisms to prevent market abuse, including insider trading and front-running. SEBI has also realigned AMC employees’ investment norms to align their interests more closely with investors.
“Oversight must have depth, not just documentation,” Mr Pandey cautioned, adding that trustees should proactively test internal controls and challenge assumptions rather than rely solely on compliance reports.
Looking ahead, Mr Pandey says trustees would play a central role as mutual funds expand into passive funds, international exposure, tokenised assets, and AI-enabled portfolios. “Technology can enable transparency, but only good governance can ensure trust,” he added.
Reaffirming SEBI’s commitment to collaboration, he says, “We will continue to simplify where possible, clarify where needed, and strengthen oversight where required.”
Mr Pandey concluded: “In the end, the true measure of our success is not the size of our AUM, but the depth of our investors’ trust.”