Mumbai, October 29: Direct mutual fund plans will become the default option on asset management companies' (AMCs) digital platforms from November 1, Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey said on October 28. Investors choosing regular plans must be informed about their higher expense ratios. Pandey said the move was part of SEBI's efforts to strengthen investor protection and improve transparency about investment costs.
Source: CNBC-TV18 via TradingView — Direct plans to become default on AMC platforms from November 1
"From November 1, Direct Plans will be the default option on digital platforms of AMCs. Investors choosing Regular Plans must be informed about their higher expense ratio," Pandey said at the NDTV Profit IGNITE event in Mumbai. For investors, the change puts the spotlight on a detail that can easily be overlooked when starting a systematic investment plan (SIP): the cost of investing, because direct and regular plans invest in the same portfolio but their expense ratios differ, and over time that difference affects the final amount an investor accumulates.
Source: Upstox — Direct plans to become default option from November 1
Why the default matters for your SIP
Direct and regular plans belong to the same mutual fund scheme and invest in the same underlying portfolio, managed by the same fund manager. The difference is how investors buy them and what they cost: direct plans are purchased directly from the fund house, without a distributor, so they generally carry lower expense ratios because distributor commissions are not included; regular plans are purchased through distributors or intermediaries, and their expense ratios include those distribution costs. The expense ratio is deducted from the scheme's assets every year, so even a small gap compounds over a long investment horizon.
IPO overhaul, AI surveillance and faster FPI entry also on the table
The direct-plan default was part of a wider package Pandey outlined at the summit. SEBI is examining the introduction of net settlement for mutual fund transactions to streamline fund flows and improve operational efficiency, will revamp the mainboard and SME IPO frameworks, and is bringing in new AI tools to monitor early corporate debt default risks. Pandey noted that India now has more than 150 million unique investors, but emphasised that simply increasing access does not by itself create financial literacy: "Investing must be a choice made with open eyes: knowing what you buy, what it costs and what you risk."
On foreign capital, Pandey confirmed SEBI is working to cut the onboarding time for foreign portfolio investors to five business days, coordinating with the Reserve Bank of India to streamline the required paperwork and reduce administrative delays for global investors entering Indian markets.
Source: Whalesbook — SEBI Makes Direct Mutual Fund Plans Default From Nov 1
From November 1, anyone starting a mutual fund investment on a fund house's own app or website will land on the lower-cost direct plan by default. Choosing a regular plan remains possible — but the platform must now explicitly flag its higher expense ratio first.