Direct Plans to Be the Default on AMC Platforms from November 1, Announces SEBI Chairman

SEBI Chairman Tuhin Kanta Pandey announced on October 28, 2026 that from November 1, direct plans will be the default option on the digital platforms of asset management companies (AMCs). Investors choosing a regular plan must be informed about its higher expense ratio. Here is what the announcement means in plain language.

What SEBI's Chairman announced

Three things, all about transparency:

1. From November 1, the Direct plan becomes the default option on AMC apps and websites.

2. If you pick a Regular plan, you will be informed that its expense ratio is higher, so the cost difference is visible before you invest.

3. Nothing is being discontinued. Both Direct and Regular plans continue to be available, and your existing investments stay exactly as they are.

SEBI's intent is simple: every investor should see the cost difference between the two options before deciding, not discover it years later.

Direct plan vs Regular plan: a quick recap

Both options are the same scheme, the same portfolio, the same fund manager. The difference is only how you buy and what it costs.

A Direct plan is bought straight from the fund house, without a distributor. No distribution commission is built into its expense ratio, so the expense ratio is lower. You choose, track and service everything yourself.

A Regular plan is bought through a mutual fund distributor. Its expense ratio includes the distributor's commission, so it is higher. In return, the distributor handles your documentation, transactions and ongoing service.

Why a small cost difference matters

Expense ratios look tiny. The gap between Direct and Regular plans of the same scheme is usually around 0.5% to 1% a year. But costs compound just like returns do.

A hypothetical illustration: Rs 10 lakh invested for 15 years at an assumed 12% gross annual return.

At a 0.50% expense ratio, it grows to about Rs 50.7 lakh. At a 1.00% expense ratio, it grows to about Rs 47.9 lakh. That half percent gap means roughly Rs 2.8 lakh less at the end. These numbers are only an illustration, not a prediction.

This is the math behind SEBI's move. Costs are real, and seeing them clearly helps you make a conscious choice.

What a mutual fund distributor actually does

The other half of the story is what the commission pays for. A distributor's work is not picking a fund once. It includes:

1. Completing and maintaining your KYC and keeping records updated

2. Executing your purchases, SIP registrations, switches and redemptions correctly

3. Helping with nomination, bank detail changes, statements and capital gain reports

4. Service when something goes wrong, like a failed transaction or a signature mismatch

5. Review reminders and answers to your questions about the schemes you hold through them

For investors who are comfortable researching, selecting and managing everything on their own, a Direct plan can work well. For investors who want a person to handle the process and stay available when needed, a Regular plan through a distributor is the structure built for that.

What this means for you

If you already invest: nothing changes automatically. Your SIPs and holdings continue as before. The announcement applies to new transactions on AMC digital platforms.

If you invest through us: there is nothing to do. You will simply see clearer cost information going forward.

If you are starting fresh: under the announced change, you will actively choose between Direct and Regular instead of having one quietly preselected.

The useful question is not which option is cheaper. It is which structure fits how you actually invest. Cost matters, and so does knowing yourself. Will you research schemes, rebalance when needed, stay calm in a market fall, and handle service issues alone? Answer honestly, and the right option usually becomes clear.

FAQs

Q: Are Regular plans being discontinued from November 2026?

A: No. Both Direct and Regular plans continue. Only the default display on AMC apps and websites is changing to Direct, as announced.

Q: Does this affect my existing mutual fund investments?

A: No. Existing investments and SIPs continue exactly as they are. The announced change applies to how new investments are presented on AMC digital platforms.

Q: What is the expense ratio?

A: It is the annual fee a mutual fund scheme charges for managing your money, shown as a percentage. It is adjusted in the NAV, so you pay it indirectly every day.

Q: How much cheaper is a Direct plan?

A: It varies by scheme and category, but the difference is commonly around 0.5% to 1% per year. Over long periods, that gap compounds into a meaningful amount.

Q: Can I switch from a Regular plan to a Direct plan?

A: Yes, a switch is possible, but it is treated as a redemption plus a fresh investment. It can have tax implications and an exit load may apply, so understand the impact before switching.

Q: What does a distributor do for the commission?

A: KYC and documentation, correct execution of transactions, SIP setup, nominations, statements, service requests, and ongoing support for the schemes you hold through them.

Source: Statement by SEBI Chairman Tuhin Kanta Pandey at NDTV Profit Ignite, October 28, 2026. Read NDTV's report.

Rushhabh Financial Services is an AMFI-Registered Mutual Fund Distributor. We help Ahmedabad families with mutual fund investments, documentation and ongoing service. Questions about your investments? WhatsApp us at 8460999234.

Mutual fund investments are subject to market risks. Read all scheme related documents carefully.