From BER Opacity to BER Clarity: Doctrinal and Market Impact Analysis of SEBI’s Mutual Fund Reforms, 2026

Abstract

The paper discusses the doctrinal and market implications of the reforms of the Securities and Exchange Board of India (SEBI) in the regulation of the expenses of mutual funds through 2026, specifically the transfer of the Total Expense Ratio (TER) model to the Base Expense Ratio (BER) model. It places the reform within the context of the Indian mutual fund industry growing rapidly as well as the growing involvement of retail investors and raises concerns on cost transparency, bundled fee models and lack of comparability under the previous TER regime. The research evaluates the legal framework of the BER system, and how it facilitated the unbundling of the managerial expenses of the brokerage, transactions and statutory charges, which contributed to the transparency and the informed decision that contributes to decision-making by the investors. It also assesses the regulatory change between price-cap based control to disclosure-based market discipline, whilst preserving scheme-specific caps to protect the interest of the investors. The paper goes further to discuss governance reforms, especially the increase in the oversight roles of trustees and evaluate the effectiveness of redressal mechanisms like SCORES. In the market, it examines the effect of these reforms on the pricing strategy, competition between asset management firms, and the confidence among
investors. It is concluded in the paper that, although BER is a major move towards transparency and accountability, its success is determined by its successful enforcement, independence of the institution, and enhancement of the financial literacy of investors.