- Mutual fund AUM has soared past ₹75 lakh crore.
- Trustees must now be active guardians of investor funds.
- Proactive and independent oversight is now mandatory.
- New rules clarify roles and aim to prevent market abuse.
- Investor trust is the ultimate measure of success, not AUM.
Source: SEBI
In a significant address to the stewards of India’s mutual fund industry, Securities and Exchange Board of India (SEBI) Chairman Shri Tuhin Kanta Pandey on 13th October, 2025, underscored the critical role of trustees as the “guardians” of investor trust, urging them to adopt proactive oversight in an era of unprecedented growth and complexity.
Speaking at the SEBI Leadership Dialogue for Trustees of Mutual Funds, the Chairman highlighted the industry’s phenomenal expansion over the past decade. He noted that Assets Under Management (AUM) have surged sixfold from approximately ₹12 lakh crore to ₹75.6 lakh crore as of September 2025. This growth has been fueled by a dramatic increase in retail participation, with the number of unique investors growing from 1 crore to over 5.6 crore in the same period.
“The journey of India’s mutual fund industry is, in many ways, a reflection of India’s economic and financial maturity,” Pandey stated. He pointed to the remarkable rise in monthly Systematic Investment Plan (SIP) flows—from ₹3,000 crore in 2016 to over ₹28,000 crore today—as evidence that mutual funds have become a “powerful instrument of wealth creation” for millions of Indian households.
With this expansion, Pandey emphasized that the governance responsibilities of trustees have become more important than ever. “Trustees are the backbone of investor confidence,” he declared, stressing that their role is “not ceremonial—it is fiduciary, moral, and institutional.” He called on them to embody three core principles: independence in judgment, proactive oversight, and accountability to every unitholder.
Addressing the evolving market landscape, the SEBI Chairman outlined new challenges and imperatives for trustees. He warned that with the rise of complex products involving derivatives, ESG investing, and alternative assets, “continuous learning and specialized training are not optional—they are essential for effective oversight.” He urged trustees to independently test internal controls at Asset Management Companies (AMCs) and ensure robust early warning systems are in place to detect and escalate anomalies.
Pandey also detailed key regulatory initiatives by SEBI aimed at strengthening the governance framework:
- Clarified Roles: SEBI has recently delineated the responsibilities of Trustees and AMC Boards, with trustees now explicitly required to conduct independent due diligence, while AMC Boards must establish a Unitholder Protection Committee.
- Market Abuse Prevention: AMCs are now mandated to have structured mechanisms to prevent market abuse, including front-running and insider trading, with trustees expected to verify that these systems are effective in spirit and substance.
- Alignment of Interests: Rules on minimum investment by AMC employees have been relaxed to better align their incentives with unitholder outcomes while easing the compliance burden.
Looking ahead, the Chairman noted that as the industry ventures into new frontiers like passive funds, tokenized assets, and AI-enabled portfolio management, the role of trustees in balancing innovation with integrity will be paramount.
“Technology can enable transparency, but only good governance can ensure trust,” Pandey concluded, reinforcing SEBI’s commitment to working with trustees to strengthen oversight. “The true measure of our success is not the size of our AUM, but the depth of our investors’ trust.”
Author
