'Growth not built on investor trust will be difficult to sustain': SEBI’s Amarjeet Singh

SEBI whole-time member Amarjeet Singh has stressed the need for investor trust and ethical conduct as India’s mutual fund industry and distribution ecosystem continue to expand. Speaking at the NJ Partners Business Training 2026 event in association with FICCI on August 13, Singh warned that pressure to acquire customers and grow assets should not come at the expense of investor outcomes.

“Growth not built on investor trust will ultimately become difficult to sustain,” Singh said, highlighting the importance of ethical distribution in the mutual fund industry.

MF industry crosses ₹85 lakh crore

Singh said the Indian mutual fund industry’s assets under management have reached around ₹85 lakh crore, compared with ₹10 lakh crore in 2014. Industry assets have therefore grown more than eight-fold in a little over a decade.

Mutual fund folios have crossed 27 crore, while the number of unique mutual fund investors has exceeded 6 crore, reflecting the growing participation of Indian households in capital markets.

The distribution ecosystem has also expanded. The number of active AMFI-registered distributors has risen from 2.4 lakh to 3.4 lakh over the past five years. Around 71% of mutual fund assets held by retail and HNI investors continue to come through distributors.

MUST READ: SEBI proposes ₹5 crore asset test for accredited investors: Who could qualify?

SEBI stresses ethical distribution

Singh said intense competition and the abundance of information and viral narratives can create pressure to prioritise customer acquisition over suitability.

“Ethical distribution therefore has to remain at the centre of the investor relationship,” he said.

According to Singh, this means fair disclosure of risks and commissions, ensuring product suitability, remaining engaged beyond the point of sale and continuously building capabilities as products become more complex.

He also warned against mis-selling, including cases where investors may not immediately realise that they have been mis-sold. “A simple test is whether you would make the same recommendation, in the same manner, to a member of your own family,” Singh said.

ALSO READ: CAS and closing price differences: What Sebi chief Tuhin Kanta Pandey said

Technology cannot replace human touch

Singh also highlighted the growing role of technology and artificial intelligence in financial product distribution. Digital onboarding, mobile platforms and AI-enabled tools can improve efficiency, reduce costs and expand reach, he said.

At the same time, he flagged risks related to accountability, transparency, suitability, cybersecurity and data protection, as well as “AI washing”, where claims about AI capabilities exceed reality.

“While technology is enabling greater dis-intermediation, it cannot take away the significance of personal human touch,” Singh said.

He added that distributors would need to demonstrate “clear and continuing value” through better understanding of investor needs and sustained engagement.

MUST READ: Need to be watchful, but be persistent: Sebi chief on new market closing auction system

SEBI proposes MF-only PMS

Singh also highlighted SEBI’s consultation on a Mutual Fund-only PMS framework. The proposed framework would invest exclusively in direct mutual fund plans, including ETFs and SIFs, with a proposed minimum investment of ₹25 lakh, compared with ₹50 lakh for conventional PMS.

SEBI has also simplified the SIF certification framework, allowing distributors with the relevant certification to distribute both mutual funds and SIFs.