SEBI chairman Tuhin Kanta Pandey said at NDTV Profit Ignite in Mumbai on Wednesday, October 28, that direct plans will become the default option on the digital platforms of asset management companies (AMCs) from November 1. Investors who pick a regular plan instead will have to be told that it carries a higher expense ratio.
Direct and regular plans of the same scheme hold the same portfolio. The difference is cost: regular plans are sold through distributors, whose commission is built into the expense ratio. Mint gave an example in which a gap of 0.5 percentage points on a ₹5 lakh holding comes to ₹2,500 a year. The change applies to AMC platforms, and his speech did not say whether other apps or distributors must follow the same default.
Pandey also said SEBI aims to cut foreign portfolio investor onboarding to as little as five business days and will watch more closely how companies spend IPO proceeds. It is extending its R(AI)DAR advertisement checker to other intermediaries and is exploring a securities market AI model built and governed in India.
- Households aware of at least one securities market product: 63% (SEBI investor survey)
- Households that take part in the market: about 9.5%
- Investors with moderate or high market knowledge: 36%
- Misleading online posts sent to platforms for takedown: more than 2.2 lakh, over 40% of them flagged by SEBI’s Sudarshan AI tool
Why it matters: Investors often accept the option an app shows first, so putting the cheaper plan first on AMC apps should send more new money into direct plans and less commission to distributors. The open question is whether SEBI will apply the same default beyond AMC platforms, to distributor apps and brokers, where the cost gap matters most.
Source: Moneycontrol; Mint; NDTV Profit; The Hindu BusinessLine (Reuters)
Image: Jimmy vikas, CC BY-SA 3.0, via Wikimedia Commons
