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SEBI, or the Securities and Exchange Board of India, is the statutory regulatory authority responsible for overseeing and regulating the Indian securities market. It was established in 1988 and granted statutory powers through the SEBI Act of 1992.
SEBI’s mandate includes protecting investor interests, developing the securities market, and regulating its functioning to ensure fairness and transparency. It has the authority to draft regulations, conduct investigations, and take enforcement actions against entities violating market norms.
SEBI’s coverage extends to all participants in the securities market—stock exchanges, listed companies, brokers, mutual funds, foreign portfolio investors (FPIs), and other intermediaries.
AMFI stands for the Association of Mutual Funds in India. It is a self-regulatory, non-profit industry body formed in 1995 to represent the Indian mutual fund industry. Though not a statutory authority like SEBI, AMFI plays a key role in ensuring ethical and uniform practices in the mutual fund sector.
AMFI comprises all SEBI-registered mutual fund houses in India and works to promote investor awareness, build trust, and standardize operational procedures. It also engages with regulators and policymakers on behalf of the industry.
One of AMFI’s core functions includes issuing ARN (AMFI Registration Number) for mutual fund distributors, a prerequisite for selling mutual fund products in India.
SEBI operates as a market watchdog with a wide range of powers aimed at maintaining transparency, efficiency, and stability in the Indian capital market:
Framing Regulations: SEBI formulates rules and regulations for all market participants. These include disclosure norms for listed companies, code of conduct for brokers, and listing requirements for stock exchanges.
Licensing and Oversight: SEBI grants registration to intermediaries such as merchant bankers, brokers, credit rating agencies, mutual funds, and investment advisers, subjecting them to ongoing compliance checks.
Market Surveillance: SEBI continuously monitors trading activity for signs of manipulation, insider trading, or other forms of malpractice. It can impose penalties, ban entities, or even initiate legal proceedings if violations are detected.
Investor Protection: One of SEBI’s primary priorities is protecting retail investors. It ensures that investors receive timely and accurate disclosures from companies and intermediaries. SEBI also runs awareness campaigns and provides grievance redressal through SCORES (SEBI Complaints Redress System).
Through its quasi-legislative, quasi-judicial, and quasi-executive powers, SEBI plays a central role in maintaining order and integrity in Indian capital markets.
AMFI functions as an industry-level facilitator that ensures mutual funds in India operate in a disciplined, ethical, and investor-friendly manner:
Implementing SEBI Guidelines: Although AMFI is not a regulator, it closely works with SEBI to implement regulatory changes across mutual fund houses and ensure compliance with investor protection norms.
Disseminating Information: AMFI plays an active role in educating the public about mutual fund investments. It runs nationwide campaigns to promote financial literacy, highlight SIP benefits, and bust myths around mutual funds.
Certifying Distributors: To improve distribution quality, AMFI issues ARNs to individuals and entities after they clear the NISM VA Mutual Fund exam. Only ARN holders can officially distribute mutual fund products in India.
Uniform Practices: AMFI sets standard operating procedures across the industry—such as uniform NAV cut-off timings, Know Your Customer (KYC) norms, and guidelines on fund advertisements and disclosures.
Liaison and Representation: AMFI acts as a bridge between mutual fund companies, SEBI, and investors, conveying concerns from the ground and recommending reforms or clarifications.
AMFI has no enforcement power like SEBI but acts as a unifying voice for the mutual fund industry and helps align the sector with standard practices.
Here’s how SEBI and AMFI differ in role and authority:
| Aspect | SEBI | AMFI |
|---|---|---|
Legal Authority |
Statutory regulator established by the government |
Industry body formed by the mutual fund sector; not a recognized SRO |
Scope |
Regulates the entire securities market |
Focuses only on the mutual fund sector |
Enforcement Powers |
Has power to investigate, penalize, and issue binding regulations |
Can issue guidelines but lacks enforcement powers |
Investor Protection Role |
Mandatory implementation of rules to safeguard investors |
Focus on awareness and ethical conduct |
Distributor Certification |
Licenses intermediaries such as brokers and advisors |
Issues ARN to certify mutual fund distributors |
The main goals SEBI pursues to safeguard the market are:
Protect investor interests through fair market practices.
Monitor and regulate stock market operations.
Prevent fraud, insider trading, and other misconduct.
Foster growth of the securities market with integrity and transparency.
AMFI focuses on these priorities to promote mutual fund transparency and awareness:
Enhance investor awareness in mutual funds.
Standardize sales and marketing practices in the mutual fund space.
Improve transparency and ethical conduct among members.
Act as a liaison between fund houses, regulators, and investors.
While SEBI enforces rules and regulations to maintain market integrity, AMFI ensures ethical practices and investor education in the mutual fund industry. Together, they create a robust system that protects and empowers investors at every level.
This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.
No. AMFI is a self-regulatory body and cannot enforce rules or penalize violators. SEBI, on the other hand, has legal enforcement authority.
It ensures that all distributors are certified (ARN-holders) and follow a standard code of conduct across the industry.
SEBI safeguards investors by regulating market participants, monitoring for fraud or malpractice, and ensuring transparency in financial dealings.
Yes. SEBI has the power to fine, ban, or take legal action against fund houses or individuals violating regulations.
AMFI conducts nationwide investor education campaigns and provides resources to help people understand mutual funds and make informed decisions.
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