SEBI Proposes New Folio Rule for Mutual Fund Investors

The regulator, Securities and Exchange Board of India (SEBI), has proposed a standard and uniform process for mutual fund folio creation and first-time investment. This new folio rule aims to simplify the entire experience for investors and refine how mutual fund companies create folios for new clients and beginners.

Currently, investors who open a mutual fund account with one Asset Management Company (AMC) are generally required to repeat the entire process when investing in another. Every fund house has its own onboarding steps, involving KYC verification, bank details and other documentation.

How the New Process Will Help Investors

SEBI’s new proposal wants to create a standardized system that works across all Mutual Funds regulated by it. Under the SEBI proposal framework, investors will be able to complete their folio creation once through a common platform or interface. After that, they can invest in multiple mutual funds without resubmitting the exact details again and again.

This change is expected to save time, reduce duplication of data and eliminate the inconvenience faced by first-time investors.

According to SEBI’s consultation paper issued in October 2025, this update also supports its broader goal of digitizing mutual fund operations and encouraging more retail participation. The regulator believes a unified, simple folio creation mechanism will not only improve transparency but also strengthen investor protection.

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How the Mutual Fund Industry Responds to SEBI’s Proposal

Experts from the mutual fund industry have welcomed the idea, saying it could cover the way for a seamless investor onboarding experience. By connecting distributors, fund houses and registrars through a single process, SEBI hopes to make mutual fund investing faster and more consistent.

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SEBI Next Steps Before Implementation

Stakeholders, including AMCs, registrar and transfer agents (RTAs) and fintech platforms, have been asked to share their feedback before SEBI finalizes the rule. Once approved, the uniform folio creation process will be executed across all fund houses.

This proposal marks another step in SEBI’s continuous effort to make mutual fund investing easier, transparent and technology-driven for millions of Indian investors.