SEBI Eases Skin-in-the-Game Rules to Attract Fresh Talent in Mutual Fund Industry
Why in News?
The Securities and Exchange Board of India (SEBI) has relaxed its ‘skin-in-the-game’ regulations for key managerial personnel (KMPs) in the mutual fund (MF) industry, a move expected to attract fresh talent and support new entrants into the sector. 
Key Issues
1. Background of the Skin-in-the-Game Rule
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Introduced to align interests of fund managers with investors, the regulation required designated employees to invest 20% of their salary in mutual fund schemes they managed.
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This investment came with a three-year lock-in period.
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The stringent rule made it difficult for young professionals and mid-level earners to join or remain in the industry.
2. Relaxation in Rules
Under the new norms that came into force recently:
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Employees earning below ₹25 lakh CTC are exempt from the rule.
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Those earning between ₹25-50 lakh must invest 10% of their salary in mutual funds.
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Employees with salaries between ₹50 lakh to ₹1 crore will invest 14%, and
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Those earning above ₹1 crore must invest 18% in MF units.
3. Special Investment Funds (SIFs)
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SEBI is encouraging the launch of Special Investment Funds (SIFs) to target high-risk, high-return investors with a minimum investment of ₹10 lakh.
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An asset management company can launch an SIF if:
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It has ₹10,000 crore average AUM for three years, or
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Appoints a Chief Investment Officer with at least 10 years of experience managing ₹5,000 crore and
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A fund manager with three years of experience managing ₹500 crore.
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4. Focus on Transparency and Accountability
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SEBI has proposed that funds raised via New Fund Offers (NFOs) must be deployed within 30 days of allotment.
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If delayed, a one-time 30-day extension can be sought with approval from the Investment Committee, which must justify the delay.
What Next?
The new regulations aim to:
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Ease recruitment challenges by making entry into the mutual fund industry more appealing for younger professionals.
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Boost transparency and timely fund deployment by Asset Management Companies (AMCs).
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Support the launch of innovative and high-return schemes through SIFs.
