Maximum permissible exit load by mutual funds lowered to 3%, Sebi approves distributor incentive scheme to widen reach

Capital market regulator Sebi has approved key measures to enhance investor protection and promote financial inclusion in the Mutual Fund space at its board meeting on September 12.

Among the decisions announced during a press briefing in Mumbai, Sebi has reduced the maximum permissible exit load that mutual fund schemes can charge from 5% to 3%. This revision aligns the regulatory framework with prevailing industry practice where exit loads are generally between 1% and 2%. The new cap also aims to balance investor protection while maintaining flexibility for schemes investing in less liquid securities.

Follow the updates from Sebi briefing after the board meet right here

To support financial inclusion, Sebi has introduced an incentive structure for distributors encouraging them to bring in new individual investors from B-30 cities (Beyond top 30 cities). These incentives will now be provided only for investments made by new individual investors (new PAN) from B-30 cities. The incentive are capped at 1% of the first application amount (in case of lumpsum investment) or total investments during the first year (in case of Systematic Investment Plan), subject to a maximum of Rs 2,000 per investor.