Jidesh Kumar Highlights Regulatory Constraints Impacting Innovation in Mutual Funds in Business Standard Article

Addressing the recently introduced MF Lite licence framework by SEBI, Jidesh Kumar, Managing Partner highlighted its potential to restrict innovation within the mutual fund industry.

Commenting on the regulation in Business Standard, Jidesh Kumar said: “The restriction under the MF Lite licence, allowing fund houses to launch only passive schemes linked to indices with over ₹5,000 crore AUM, significantly limits their ability to offer differentiated products. It confines them to replicating strategies tied to well-established indices, leaving little room for innovation or niche products tailored to emerging themes like ESG (environmental, social, and governance) or tech-focused sectors.”

The MF Lite licence, aimed at streamlining market entry for smaller fund houses, has faced scrutiny for its limiting scope. By restricting offerings to passive schemes tied to high-AUM indices, the regulation may hinder the development of thematic and innovative products, which are increasingly sought by modern investors.

Article Link: https://www.business-standard.com/markets/mutual-fund/limited-product-possibilities-in-mf-lite-as-sebi-sets-aum-criteria-125010100859_1.html