The Securities and Exchange Board of India (SEBI) has relaxed the rules to allow fintech startups and other entities to enter the mutual fund (MF) business. Until now, the companies were supposed to have 5 years of experience in the financial services business and 3 years of profitability, in addition to maintaining a net worth of ₹ 50 Cr.
Recently, SEBI has waived these standards. “To facilitate innovation and greater reach to more investors at a faster pace, including technology solutions,” the regulator told a board meeting.
Some of the other changes made to the rules include requiring AMCs to maintain their minimum net worth continuously and not just towards the end of the year. Experts believe that the rule change could make it easier for tech startups to enter the mutual fund business. Specifically, the waiver of the profitability requirement is seen as a boost for Indian startups, most of which have put their initial public offering (IPO) plans on the back burner, hoping to turn a profit.