Sebi makes direct mutual fund plans the default from Nov 1

Investors get a cheaper default option while Adani and Indian Hotels plan 2,000 rooms across four cities.

SEBI has directed all mutual fund houses to make the 'direct' plan the default option for investments made through their websites and apps from November 1.

Chairman Tuhin Kanta Pandey announced the move at the NDTV Profit IGNITE summit in Mumbai, placing distribution transparency among the regulator's investor-protection priorities. Direct plans are bought straight from the fund house without distributor commissions, so their expense ratios are lower than regular plans of the same scheme.

Investors who still choose a regular plan must now be explicitly informed about its higher expense ratio, and consolidated account statements must disclose the commission paid to distributors on SIP transactions through regular plans.

The change concerns only the default option shown on AMC digital platforms — it does not eliminate regular plans, and existing SIPs will not automatically switch.

Pandey also outlined wider reforms including net settlement for mutual fund transactions, an IPO framework review and AI-based market surveillance.