SEBI's new mutual fund rulebook: what the 2026 regulations change for you

For almost three decades, Indian mutual funds ran on a rulebook written in 1996. On 17 December 2025, SEBI's board approved its replacement, the SEBI (Mutual Funds) Regulations, 2026, and it took effect on 1 April 2026.

Most of the new text matters to fund houses, trustees and auditors. Three parts of it matter to someone running a SIP from a salary account, and that is what this note covers.

The expense ratio is now split into parts

Under the old rules you saw one number, the total expense ratio (TER). It bundled together what the fund house charges for running the scheme with statutory levies and transaction costs.

The new framework separates them. The fund house's own charge is now the base expense ratio (BER). Government levies and certain costs are shown separately rather than folded into one figure.

This doesn't make anything cheaper by itself, but it does make costs legible. You can now see what you pay the fund house to manage the scheme, apart from the taxes and charges it can't control.

Costs are expected to come down

Alongside the restructuring, SEBI lowered brokerage caps and removed an additional expense allowance that schemes were previously allowed to charge. SEBI's own estimate is that average charges should fall by roughly 10 to 15 basis points, that is, 0.10% to 0.15% a year.

That sounds like rounding error, but on a long SIP it adds up.

Here is the arithmetic behind that number:

The same ₹24 lakh goes in either way. The only change is a fraction of a percent a year, and it compounds for 240 months.

More categories, which needs more care

The number of mutual fund categories has grown from 36 to 40. More categories can mean products that fit specific goals more precisely. They also mean more ways to end up holding three schemes that do roughly the same thing.

Before adding a scheme from a new category, the useful questions haven't changed:

• Which goal is this money for, and when do you need it?
• What does this scheme hold that your existing schemes don't?
• What does it cost, now that the costs are shown in parts?

A new category is a new label. Whether it belongs in your portfolio depends on what it holds, not on what it's called.

What you don't need to do

You don't need to switch schemes because the regulations changed. Switching can trigger exit loads and capital gains tax, and those are certain costs, unlike the savings you'd be chasing.

The change works for you automatically: if your scheme's costs fall, your NAV carries the benefit. What's worth doing is a calm annual review covering overlap between schemes, the costs you're carrying, and whether each holding still matches the goal it was bought for.

The short version

1. The 1996 regulations have been replaced, effective 1 April 2026.
2. Costs are now shown in parts, with the fund house's charge separated as the base expense ratio.
3. SEBI expects average charges to fall by around 10 to 15 basis points.
4. Categories have grown from 36 to 40, so check for overlap before you add anything.