SEBI Mutual Fund Cost Reset: BER Replaces TER From April 2026
Why in the news
SEBI reworked how mutual funds charge investors and modernised stockbroking rules for the first time since 1992. Several debt market and credit rating changes came along.
Key facts
- Effective date: 1 April 2026; industry size ₹80 trillion.
- BER: core fee only for managing money, excluding pass-through levies shown separately.
- New formula: TER = BER + brokerage + regulatory levies + statutory taxes.
- Exit-load brokerage: extra 5 bps scrapped.
| Brokerage | Earlier | Now |
|---|---|---|
| Cash market | 12 bps | 6 bps |
| Derivatives | 5 bps | 2 bps |
One basis point is 0.01%, so 6 bps equals 0.06%.
Stockbroker rules
- Regulations regrouped into 11 chapters; outdated provisions removed or merged.
- Stock exchanges become first-line regulators, monitoring brokers for compliance, reporting and misconduct.
- Qualified Stockbroker (QSB) criteria refined so large firms face tighter supervision.
- Pledged shares stay locked in for the required period even after pledge invocation, closing an IPO promoter lock-in gap.
Debt market and other reforms
- Issuers may offer extra interest or price discounts to groups such as women and senior citizens.
- HVDLE threshold raised from ₹1,000 crore to ₹5,000 crore, easing bond issuance for NBFCs, HFCs and ARCs.
- Credit rating agencies may rate instruments regulated by other financial sector authorities.
- Unclaimed amounts from non-convertible securities go to the Investor Education and Protection Fund seven years after maturity.
Market impact
- Margin pressure on AMCs, especially small ones.
- Costs may be passed on to distributors.
- Clearer pricing and lower long-term cost for investors.
Exam angle
- New term: Base Expense Ratio; effective 1 April 2026.
- Stockbroker rules last overhauled in 1992.
- HVDLE limit: ₹5,000 crore.