What is SEBI: Meaning, Structure, Regulations, Categorisation

July 16, 2020Divya Singh RathoreMutual Funds

Table of Content:

What is SEBI?
Classification & Categorisation of Funds
SEBI Regulations
Structure of SEBI
Functions of SEBI
Powers of SEBI

What is SEBI?

Securities and Exchange Board of India (SEBI) is a statutory regulatory body entrusted with the responsibility to regulate the Indian capital markets. It monitors and regulates the securities market and protects the interests of the investors by enforcing certain rules and regulations.

SEBI was founded on April 12, 1992, under the SEBI Act, 1992. Headquartered in Mumbai, India, SEBI has regional offices in New Delhi, Chennai, Kolkata and Ahmedabad along with other local regional offices across prominent cities in India.

The objective of SEBI is to ensure that the Indian capital market works in a systematic manner and provide investors with a transparent environment for their investment. To put it simply, the primary reason for setting up SEBI was to prevent malpractices in the capital market of India and promote the development of the capital markets.

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SEBI Categorisation and Rationalisation of Mutual Funds

Given below are the different mutual funds categorised and rationalised by SEBI-

Equity Funds

Category Name	Definition
Large Cap Fund	An open-ended equity scheme primarily investing in large cap stocks. Minimum 80% total assets are invested in equity & equity related securities of large cap companies
Mid Cap Fund	An open-ended equity scheme primarily investing in mid cap stocks. Minimum 65% of total assets are invested in equity & equity related instruments of mid cap companies
Small Cap Fund	An open-ended equity scheme primarily investing in small cap stocks. Minimum 65% of total assets are invested in equity & equity related securities of small cap companies
Multi Cap Fund	An open-ended equity scheme investing in stocks across market capitalisation (large, small, mid cap). Minimum 65% of total assets are invested in equity and equity related instruments
Large & Mid Cap Fund	An open-ended equity scheme investing in stocks from both large cap & mid cap companies. Minimum 35% of total assets are invested in equity of large cap companies and 35% in mid cap companies
Dividend Yield Fund	An open-ended equity scheme primarily investing only in corporations that have significantly high dividend yielding stocks. Minimum 65% of total assets invested in equity
Value Fund	A Value Fund is a type of Mutual Fund which follows value investing strategy. Minimum 65% of total assets is invested in equity & equity related instruments
Contra Fund	A Contra Fund is a type of Mutual Fund which follows contrarian investing strategy. Minimum 65% of total assets is invested in equity & equity related instruments
Focused Fund	An open-ended equity scheme investing in maximum 30 stocks from either of the market caps. Minimum 65% of total assets are invested in equity related instruments
Sectoral/Thematic fund	An open-ended equity scheme investing in businesses that operate in a particular sector or industry. Minimum 80% of total assets are invested in equity of a particular sector/theme
ELSS	An open-ended equity linked tax saving scheme with a lock-in of three years. Minimum 80% of total assets are invested in equity related securities

Debt Funds

Category Name	Definition
Overnight Fund	An open ended debt scheme which invests in overnight securities having maturity of 1 day
Liquid Fund	An open ended debt scheme which invests in debt & money market instruments with maturity up to 91 days
Ultra Short Duration Fund	An open ended debt scheme which primarily invests in debt instruments with Macaulay duration between 3 to 6 months
Low Duration Fund	An open ended debt scheme which invests in debt instruments with Macaulay duration between 6 to 12 months
Money Market Fund	An open ended debt scheme which invests in debt & money market instruments having maturity up to 1 year
Short Duration Fund	An open ended debt scheme which invests in debt instruments with Macaulay duration between 1 to 3 years
Medium Duration Fund	An open ended debt scheme which invests in debt instruments with Macaulay duration of 4 to 7 years
Long Duration Fund	An open ended debt scheme which invests in debt instruments with Macaulay duration greater than 7 years
Dynamic Bond Fund	An open ended debt scheme which invests in debt instruments across durations
Corporate Bond Fund	An open ended debt scheme which invests in highest rated corporate bonds. Minimum 65% of total assets are allocated in corporate bonds
Credit Risk Fund	An open ended debt scheme which invests in below highest rated corporate bonds. Minimum 65% of total assets are allocated in below highest rated corporate bonds
Banking and PSU Fund	An open ended scheme which invests in debt instruments of Banks, Public Sector Undertakings and Public Sector Financial Institutions. Minimum 80% of total assets are allocated in securities from these sectors
Gilt Fund	An open ended scheme which invests in government securities across maturity
Gilt Fund with 10 year constant duration	An open ended debt scheme investing in government securities having a constant maturity of 10 years
Floater Fund	An open ended debt scheme primarily investing in floating rate instruments

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Hybrid Schemes

Category Name	Definition
Conservative Hybrid Fund	An open ended hybrid scheme which primarily invests 75% to 90% of total assets in debt instruments and 10% to 25% in equity
Balanced Hybrid Fund	An open ended balanced scheme which invests 40% to 60% of total assets in debt instruments and and 40% to 60% in equity instruments
Aggressive Hybrid Fund	An open ended aggressive scheme which primarily invests 65% to 80% of total assets in equity & equity related instruments. 20% to 30% assets are placed in debt securities
Dynamic Asset Allocation or Balanced Advantage Fund	An open ended fund which invests in equity/debt that is managed dynamically
Multi Asset Allocation Fund	An open ended scheme investing in different asset classes with a minimum of 10% allocated in each asset class
Arbitrage Fund	An open ended scheme investing in arbitrage opportunities with a minimum of 65% of total assets allocated in equity & equity related securities
Equity Savings	An open ended scheme investing at least 65% in equity & equity related instruments and at least 10% in debt securities

Solution Oriented Schemes

Category Name	Definition
Retirement Fund	An open ended retirement solution oriented scheme which comes with a lock-in of 5 years or till retirement age (whichever is earlier)
Children’s Fund	An open ended fund for investment for children which comes with a lock-in for minimum 5 years or till the child attains the age of majority

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Other Schemes

Category Name	Definition
Index Funds/ETF	An open ended scheme which replicates/tracks the index. Minimum 95% of securities are invested in the securities of a particular index
FoF (Overseas/Domestic)	An open ended fund of fund scheme which invests 95% of the total assets in the underlying fund

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