The Association of Mutual Funds of India has requested SEBI to lower the mandatory investor education levy, citing a large surplus in its dedicated fund. A reduction from the current collection could help asset management companies retain more capital and improve profitability.
The Association of Mutual Funds of India (Amfi) has approached the Securities and Exchange Board of India (SEBI) with a request to lower the annual levy collected from asset management companies (AMCs) for investor awareness initiatives. This proposal aims to address the significant surplus currently held in the industry's dedicated investor education fund, which Amfi suggests exceeds the amount that can be effectively deployed.
Current Contribution Structure
Under existing regulations, AMCs are required to set aside 2 basis points (0.02%) of their daily net assets for investor education. One basis point is kept by the AMC for its own awareness programs, while the other is contributed to the central fund managed by Amfi. With the Indian mutual fund industry’s total assets under management reaching approximately ₹82.2 trillion as of June 2026, the industry-wide contribution to this central fund has reached about ₹800 crore annually.
Surplus Funds and Usage Patterns
Amfi’s request comes after data showed the fund’s balance exceeded ₹1,114 crore by the end of the 2025 financial year. Historically, the association has utilized these funds for large-scale media advertising, intermediary training, and mobile awareness campaigns. However, with the current corpus growing at a rate that outpaces expenditure, there is increasing internal pressure to reduce the mandatory contribution. Reports from earlier this year indicated that a significant portion of the fund, roughly 87.5% in FY25, was directed toward media campaigns, raising questions about whether the current scale of collection remains necessary.
Potential Impact on AMC Profitability
For investors and market observers, this proposal is significant because of its potential impact on the bottom line of mutual fund companies. Since these mandatory expenses are currently part of the Total Expense Ratio (TER), any reduction in the required contribution could provide AMCs with more room to manage their operational expenses.
This is particularly important for smaller AMCs that have historically struggled with high operational costs and smaller asset bases. By retaining more of the capital they currently contribute to the central fund, these companies could potentially improve their profit margins. As several AMCs have recently joined the public markets through IPOs, the pressure to demonstrate stable or improving profitability has become a central focus for shareholders. The final decision rests with SEBI, and investors will be looking for clarity on whether the regulator agrees that the current fund size is sufficient to meet long-term investor education goals without further mandatory increases.