The Association of Mutual Funds in India (AMFI) is preparing to submit its response to SEBI’s consultation paper on reducing Total Expense Ratios (TERs), sources told CNBC-TV18, suggesting that the proposed cuts could disrupt fund launches and the mutual fund distribution ecosystem.

According to sources familiar with the matter, the TER gap of 1.2% between small and large funds under SEBI’s proposal is “too steep” and could disadvantage larger mutual funds if approved.

While SEBI has proposed a TER cap of 2.1% for schemes with AUM up to ₹500 crore, it would fall to just 0.9% for schemes with AUM exceeding ₹50,000 crore.

Sources said AMFI believes a sharp drop of this magnitude could hurt new fund offers (NFOs) and strain distributor commissions, as AMCs may struggle to operate with lowe

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