RAS question
A mutual fund is regulated by:
Correct answer: (D) SEBI.
A mutual fund in India is regulated by SEBI under the SEBI (Mutual Funds) Regulations, 1996.
Explanation
SEBI is the regulator for mutual funds in India because the governing framework is the SEBI (Mutual Funds) Regulations, 1996. The official SEBI legal page lists these regulations under its Regulations section, with the original entry dated 9 December 1996 and subsequent amendment entries. Mutual funds pool money from investors and invest that money in securities such as stocks, bonds and government securities, so they fall under securities-market regulation. AMFI is relevant to the industry, but it is the industry body, not the statutory regulator. Therefore, among RBI, PFRDA, IRDA and SEBI, the correct regulator is SEBI.
Why the other options are wrong
- (A) RBI regulates banks, whereas mutual funds are governed by SEBI's mutual fund regulations.
- (B) PFRDA regulates pension funds, not mutual funds that pool investor money for securities-market investments.
- (C) IRDA regulates insurance, while mutual funds are covered by SEBI's securities-market regulatory framework.
Concept
Financial-sector regulators and their institutional domains are part of the Indian economy syllabus area. RAS repeatedly asks such questions because confusing RBI, SEBI, IRDA and PFRDA is a common trap in banking, capital-market and insurance topics.