What Is the MF Lite Framework? SEBI's Passive Fund Route
The MF Lite framework is SEBI's lighter registration route for fund houses that run passive schemes only. It removes the track record, profitability and net worth bars that a full mutual fund sponsor faces, on the reasoning that running an index fund is a different job from running an actively managed one. As of the SEBI (Mutual Funds) Regulations, 2026, the MF Lite framework is Chapter X of the principal regulations rather than a bolt-on.
Definition
MF Lite
is a mutual fund registered under Chapter X of the SEBI (Mutual Funds) Regulations, 2026, holding only eligible passive schemes such as index funds, exchange traded funds and fund of funds. It carries lighter sponsor eligibility and net worth requirements than a full mutual fund registration. Source: SEBI.
Where the MF Lite rules actually live now
This matters for anyone citing a source. The SEBI (Mutual Funds) Regulations, 2026 came into force on 1 April 2026 and repealed the SEBI (Mutual Funds) Regulations, 1996 under Regulation 85. MF Lite was introduced by amendment to the 1996 regulations in December 2024; it is now Chapter X of the 2026 regulations, with eligibility at Regulation 57 and scheme transfer at Regulation 58.
Chapter X works by carve-out. All other provisions of the regulations apply to an MF Lite and its schemes, except a listed set including Regulations 5, 9, 10, 11, 12, 21, 22, 23, 40, Chapter IX, and the Second and Third Schedules. Those exclusions are the lightening.
What are the two eligibility routes?
An applicant qualifies under one of two routes, and the trade is experience and profitability against capital.
| Route 1 | Route 2 | |
|---|---|---|
| Experience | No experience criteria | Combined experience of CEO, COO, Chief Compliance Officer and CIO of at least 20 years, each with at least 3 years relevant |
| Profitability | Net profit in three of the preceding five years including the fifth, and average annual net profit of at least Rs 5 crore over five years | No profitability criteria |
| Sponsor net worth | Positive net worth in each of the preceding five years | Not applicable |
| AMC net worth | At least Rs 35 crore at all times | Rs 75 crore at registration, maintained above Rs 50 crore continuously |
| Lock-in | None | Shareholding equal to capital contributed, to the extent of at least Rs 75 crore, locked in for three years |
Route 1 is the established, profitable sponsor. Route 2 is the well capitalised newcomer that buys its way past the track record test. Both routes require positive liquid net worth of the sponsor exceeding its proposed capital contribution to the AMC.
More than Rs 25 crore
The reduced net worth an MF Lite asset management company must maintain after five consecutive years of profits, under either eligibility route
Source: SEBI (Mutual Funds) Regulations, 2026, Regulation 57
If the AMC's total assets under management exceed the thresholds SEBI specifies, the lighter figure falls away and the AMC must meet the net worth requirements of the corresponding route in Chapter II, which is the full mutual fund regime.
Can an existing fund house use it?
Yes, and this is the provision that decides whether MF Lite changes the market or just adds entrants. Regulation 58 lets an existing sponsor transfer its eligible passive schemes from its existing mutual fund into a mutual fund lite. The condition attached is one way: once the transfer happens, the existing mutual fund shall not launch passive schemes that are eligible under the MF Lite route. A fund house cannot run the same passive business in both places.
What this does and does not change for someone reading fund disclosures
It changes who may be on the other side of a passive scheme, not what gets disclosed about it. An MF Lite scheme still files the same portfolio disclosures every scheme files, so monthly AMFI portfolio data and the scheme information document work the same way. The one thing to carry forward is the citation: a document describing mutual fund obligations under the 1996 regulations is describing a repealed instrument.
Flock reports the filings themselves, dated and linked to source. What a fund's structure means for your own view of it is your call to make. Not investment advice.
Frequently asked questions
What is the MF Lite framework?
A lighter registration and compliance route for fund houses that run only passive schemes. MF Lite now sits in Chapter X of the SEBI (Mutual Funds) Regulations, 2026, which came into force on 1 April 2026 and repealed the 1996 regulations. Source: SEBI (Mutual Funds) Regulations, 2026.
What schemes can an MF Lite run?
Only eligible passive schemes. The definition covers a mutual fund holding only such index funds, exchange traded funds, fund of funds or any other eligible passive scheme as the Board specifies. An MF Lite cannot run an actively managed scheme. Source: SEBI (Mutual Funds) Regulations, 2026, Regulation 2 and Chapter X.
What net worth does an MF Lite asset management company need?
It depends on the route. Under Route 1 the MF Lite AMC net worth must be at least Rs 35 crore at all times. Under Route 2 it is Rs 75 crore at registration, maintained above Rs 50 crore continuously. Under either route, five consecutive years of profits reduces the requirement to more than Rs 25 crore. Source: SEBI (Mutual Funds) Regulations, 2026, Regulation 57.
Can an existing fund house move its passive schemes into an MF Lite?
Yes. Regulation 58 allows an existing sponsor to transfer eligible passive schemes from its existing mutual fund to a mutual fund lite. Once it does, the existing mutual fund may not launch passive schemes that are eligible under the MF Lite route. Source: SEBI (Mutual Funds) Regulations, 2026, Regulation 58.
Flock tracks these filings, sourced, dated, and linked back to the original. See what smart-money entities disclosed, without the guesswork about what it means.
Disclosures shown are public regulatory filings. Data may be delayed or incomplete. Smart-money entities may no longer hold positions shown. Not investment advice.