SEBI gives green light to fintech startups for launching mutual funds

The Securities and Exchange Board of India (SEBI) has relaxed the norms to allow fintech startups and other entities to enter the mutual fund (MF) business. Until now,the firms were supposed to have 5 years of experience in the financial services business and have 3 years of profitability, along with maintaining a net worth of ₹ 50 Cr.

Recently, SEBI has now waived these norms.“To facilitate innovation and enhanced reach to more investors at a faster pace including tech-enabled solutions”, said the regulator in a board meeting.

Some of the other changes made in the norms include requiring AMCs to maintain their minimum net worth continuously and not just towards the year-end. Experts believe that the change in norms could facilitate the entry of tech startups in the mutual fund business. Specifically, the waiving of the profitability requirement is seen as a boost for Indian startups, most of whom have put their initial public offering (IPO) plans on the backburner, waiting to turn a profit.

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