Sebi approves new rules to widen investment avenues
GS3Economy · S&T · Environment · Security· Capital markets & SEBI· Prelims + Mains·
Capital market regulation and asset allocation: a GS3 topic on financial inclusion and investment frameworks.
Why in news
Sebi introduced the PRIM route to allow portfolio managers to invest client funds in mutual fund direct plans, including ETFs and index funds, to broaden investment avenues.
Background
The new framework requires a minimum ticket size of ₹25 lakh for investments. Fixed management fees are capped at 1% of Assets Under Management (AUM).
Facts for Prelims
- FactMinimum ticket size for the PRIM route: ₹25 lakh
- FactManagement fee cap: 1% of AUM
- FactInvestment limit: Up to 10% of client AUM allowed for IPOs, primary debt, and foreign securities
Prelims practice question
What is the maximum management fee cap allowed under the new PRIM route rules?
- (a)0.5% of AUM
- (b)5% of AUM
- (c)2% of AUM
- (d)1% of AUM
Show answer
Answer: (d) 1% of AUM — The management fees for the PRIM route are capped at 1% of Assets Under Management (AUM).
For Mains
Q. Discuss how the expansion of investment avenues through the PRIM route can enhance retail investor participation and deepen the Indian capital markets.
Dimensions to cover in your answer
- Market depth: Diversification into ETFs and index funds to reduce concentration risk
- Regulatory oversight: Balancing investor protection with the expansion of investment scope into unlisted debt
- Inclusion: Lowering barriers for independent fund managers to foster a competitive investment ecosystem
Keywords: Capital Market Depth · Regulatory Framework · Asset Allocation · Retail Participation · Portfolio Management
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This note is generated automatically from SatyaDheesh's news feed and mapped to the UPSC CSE syllabus. Check facts against the original report or PIB before using them in an answer.