Market regulator Sebi suspends small town-linked incentive for MFs

The B30 incentive allows MFs to charge up to 30 basis points over and above the expense ratio if a certain portion of their assets is from B30 regions

Mutual funds (MFs) can no longer charge extra expenses in lieu of bringing assets from beyond the top 30 cities (B30). The Securities and Exchange Board of India (Sebi) has suspended the incentive until asset management companies (AMCs) put a stop to the misuse of the mechanism — both by asset management companies (AMCs) and MF distributors.

“It is desirable to keep the B30 incentive structure in abeyance until AMCs place effective controls to address the concerns,” Sebi said in a letter to the Association of Mutual Funds in India.

The regulator added that either the incentive structure will be