1 Finance Gets SEBI In-Principle Approval for MF Lite AMC

Key Takeaways

• 1 Finance has received SEBI's in-principle approval to establish an asset management company under the MF Lite framework. 
• The proposed fund house will focus on eligible passive products such as index funds and ETFs. 
• 1 Finance is targeting a Q4 FY27 launch, subject to completing regulatory requirements and receiving final registration. 

1 Finance has received in-principle approval from the Securities and Exchange Board of India to establish an asset management company under the regulator's Mutual Funds Lite framework. 

The approval moves the financial advisory and wealth-tech company closer to entering India's mutual fund industry through a passive-focused fund house. 1 Finance expects to launch the AMC in the fourth quarter of FY27, provided it completes the remaining regulatory and operational requirements and receives final registration. 

In-principle approval does not itself permit the company to launch mutual fund schemes. Final registration from SEBI is required before schemes can be introduced. 

SEBI introduced the MF Lite framework on December 31, 2024 as a lighter regulatory structure specifically for eligible passively managed mutual fund schemes. The framework is intended to lower entry barriers, reduce certain compliance requirements and encourage greater participation in the passive investment market. 

Unlike a conventional mutual fund licence, which may cover both actively and passively managed products, an MF Lite structure is restricted to passive schemes that meet the regulator's eligibility conditions. 

Under the first phase of the framework, eligible products include passive schemes tracking specified domestic equity indices, certain government securities, treasury bill and state development loan indices, Gold ETFs, Silver ETFs and eligible fund-of-funds structures. SEBI's framework also sets conditions for overseas passive schemes. 

For domestic equity and eligible debt indices, the framework uses thresholds linked to the collective assets tracking the relevant index, with AMFI prescribing eligible indices in consultation with SEBI. 

The proposed 1 Finance AMC is expected to focus on products such as index funds and exchange-traded funds. 

If final registration is granted as planned, the company could become one of the earliest entrants to establish an AMC specifically under the MF Lite route, adding another participant to India's expanding passive-fund segment.