India’s markets regulator issues guidelines on eased rules for passive funds – ThePrint – ReutersFeed

(Reuters) – India’s markets regulator on Tuesday issued the eligibility criteria that passively managed mutual funds will have to meet to access its eased rules, including setting up a minimum assets under management (AUM) threshold.

The Securities and Exchange Board of India (SEBI) had first proposed a series of easier rules for such mutual funds in July, in a move to reduce the compliance burden, boost competition and ease the entry of funds seeking to launch less risky schemes.

It approved these rules in September, allowing fund houses to spin off passive funds that replicate indices with lower capital.

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SEBI, in a circular published on its website on Tuesday, said passive funds based on domestic equity indices will be eligible for “MF Lite”, or the eased rules framework, in the initial phase if they have an AUM of 50 billion rupees or more.

It also said passive funds based on overseas equity indices, with an AUM of over $20 billion, will come under MF Lite in phase one.

The regulator added that under pooled investment vehicles, only private equity funds can sponsor passive funds in the MF Lite category.

(Reporting by Nishit Navin in Bengaluru; Editing by Shreya Biswas)

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