SEBI Considers Allowing Mutual Fund Distributors to Hold Investment Adviser Licences

Key Takeaways

• SEBI is considering whether individual mutual fund distributors should be permitted to hold registered investment adviser licences alongside their distribution registrations.
• The proposal is being examined by a regulatory working group reviewing the rules governing mutual fund distribution and investment advice.
• India has more than 100,000 mutual fund distributors and 1,048 registered investment advisers, highlighting the different scales of the two intermediary networks.

SEBI Reviews Dual Registration for Individual Distributors

The Securities and Exchange Board of India (SEBI) is examining a proposal that could allow individual mutual fund distributors (MFDs) to obtain registered investment adviser (RIA) licences while continuing their distribution activities.

The proposal forms part of a broader review of the regulatory framework governing investment advice and mutual fund distribution. Mint reported on 9 October 2026 that a working group established by the regulator has been considering dual registration for individual distributors.

Under the framework described in the report, institutions and other non-individual entities can hold both registrations, while individual distributors do not have the same flexibility.

The proposal remains under consideration. SEBI has not announced a final rule allowing individual MFDs to operate under both registrations.

Why the Regulatory Review Matters

Mutual fund distributors and registered investment advisers operate under different compensation arrangements and regulatory responsibilities.

Distributors facilitate investments in mutual fund schemes and generally receive commissions through the distribution framework. Registered investment advisers provide investment advice to clients for fees and operate under a separate regulatory framework.

The distinction becomes relevant when an individual distributor is approached for financial planning advice extending beyond mutual funds.

SEBI's review is examining whether the existing regulatory separation adequately reflects the services intermediaries provide and whether a dual-registration structure could be introduced for individuals.

According to the Mint report, India has 1,048 registered investment advisers and more than 100,000 mutual fund distributors.

These figures indicate that the distribution network is considerably larger than the registered advisory network.

Potential Compliance and Conflict-of-Interest Issues

Allowing individuals to hold both registrations would require clear boundaries between distribution and advisory activities.

The compensation structures create a particular regulatory consideration. A distributor can receive commissions from mutual fund products, whereas a registered investment adviser operates under a fee-based advisory arrangement.

Holding both registrations could therefore require safeguards governing client disclosures, compensation, record-keeping and the separation of activities.

The review also raises questions about compliance costs for smaller intermediaries that might choose to obtain an additional licence.

The regulatory working group's recommendations have reportedly been submitted to SEBI. Any changes would depend on the regulator's final decision and the conditions specified in the resulting framework.

Current Regulatory Position

The reported proposal does not change the existing registration requirements.

Individual mutual fund distributors must continue operating within the rules applicable to their activities, while registered investment advisers remain subject to the investment advisory regulations.

A final SEBI announcement would be needed to establish eligibility, operational conditions and implementation timelines for any dual-registration arrangement.