SEBI reforms 2026: 12 changes investors should track

Why SEBI’s latest set of decisions matters

SEBI’s recent board decisions signal a push to simplify rules while keeping investor safeguards intact. The measures span several parts of the market, including buybacks, mutual funds, alternative investment funds (AIFs), securitisation, municipal bonds, IPO-related norms, and governance standards. A key theme is operational speed: faster transmission of securities to heirs, shorter AIF launch timelines, and smoother settlement processes for foreign investors.

The regulator has also targeted compliance friction where it believes risks can be managed through clearer accountability. This is visible in changes such as making merchant banker appointment discretionary for buybacks and creating reduced-compliance categories like “inoperative fund” status for AIFs.

These reforms were discussed across multiple board meetings, including SEBI’s 213th Board meeting held on 23 March 2026 and its 212th Board meeting in Mumbai on December 17, 2025.

Faster transmission of securities to legal heirs

SEBI approved comprehensive reforms to facilitate faster transmission of securities to legal heirs and claimants of deceased investors. Transmission is a recurring pain point for families, often delayed by documentation and process gaps across intermediaries.

While SEBI has not detailed all operational steps in the provided information, the direction is clear: the regulator is aiming to shorten timelines and make claims processing more predictable. For investors, this is an important “after-life” market reform that reduces the risk of holdings becoming stuck in procedural backlogs.

Open-market buybacks return via stock exchanges

SEBI chairman Tuhin Kanta Pandey said the board has approved the reintroduction of open-market buybacks through stock exchanges. The mechanism is set to take effect from August 1.

Open-market buybacks are a widely used capital-return tool globally, but they require tight execution and monitoring because purchases happen on the market. The return of this route through stock exchanges is intended to provide a clearer framework for listed companies that prefer gradual buybacks rather than tender offers.

Lower compliance burden: merchant banker appointment made optional

To reduce compliance costs and improve ease of doing business, SEBI has made the appointment of merchant bankers discretionary for buybacks. Their responsibilities can now be distributed among companies, auditors, and stock exchanges.

This change shifts the compliance design from a single mandated gatekeeper to multiple accountable entities. For the market, the practical implication is that buybacks may become cheaper to execute, while the oversight role is shared across institutions already involved in disclosure and verification.

Mutual funds allowed intraday borrowing for liquidity mismatches

SEBI has allowed mutual funds to avail intraday borrowings to manage temporary liquidity mismatches arising from settlements, forex transactions, and derivative obligations. The borrowing cannot be used for leverage and must be repaid by the end of the day.

This is a narrowly defined facility intended to handle operational timing gaps. By restricting usage to intraday repayment and explicitly banning leverage, SEBI is aiming to solve settlement-day pressures without encouraging riskier balance-sheet behaviour in mutual fund schemes.

GARUDA to speed up AIF launches, plus easier launches for select schemes

SEBI approved the GARUDA mechanism, reducing the launch timeline for regular AIF schemes to 10 working days. Angel Funds and Accredited Investor-only schemes can now be launched immediately after registration or filing.

This is a material process change for fund managers, particularly those competing on speed to deploy capital. Faster launches can reduce uncertainty for investors and managers, but it also puts pressure on intermediaries and internal controls to ensure disclosures and compliance checks are completed on time.

AIF and market plumbing changes from the March 2026 board meeting

At its 213th Board meeting held on 23 March 2026, SEBI approved multiple reforms aimed at market efficiency and governance. AIFs will be allowed to retain liquidation proceeds under specified conditions, and SEBI introduced an “inoperative fund” status with reduced compliance requirements.

SEBI also approved reforms for InvITs and REITs to provide flexibility in investments, borrowings, and asset management. Alongside this, amendments to the “fit and proper person” criteria were approved to relax automatic disqualifications while maintaining regulatory safeguards.

For foreign investors, SEBI said Foreign Portfolio Investors (FPIs) will be permitted net settlement of funds in cash market transactions to reduce costs, with implementation by December 2026.

Listed securitisation and municipal bonds: push for broader participation

SEBI approved amendments to align securitised debt instrument regulations with RBI norms, with the stated aim of promoting the development of the listed securitisation market. This alignment matters because mismatched regulatory expectations can limit product growth and listing appetite.

SEBI also approved measures to encourage retail participation in municipal bonds. The steps include incentives such as additional interest or discounts for categories such as senior citizens, women, and retail investors.

Social Impact Funds: minimum investment cut sharply

The minimum investment value for individual investors in the Social Impact Funds of AIFs has been slashed from ₹2 lakh to ₹1,000. SEBI’s March 2026 meeting also reiterated this reduction as a way to boost retail participation.

This is one of the most direct retail-facing changes in the package. Lowering the minimum ticket size can broaden access, although investors still need to evaluate product risk, liquidity, and the suitability of impact-oriented strategies.

IPO and listing framework updates from the December 2025 meeting

In its 212th Board Meeting held in Mumbai on December 17, 2025, SEBI approved wide-ranging reforms across the securities market, including replacing the Stock Brokers Regulations, 1992 with the SEBI (Stock Brokers) Regulations, 2025.

SEBI also eased Minimum Public Offer (MPO) and Minimum Public Shareholding (MPS) requirements for large IPOs. It expanded anchor investor participation to include insurance companies and pension funds, with the quota increased to 40%. Separately, SEBI capped mutual fund exit loads at 3%, down from 5%, and recognised REITs as equity instruments, enabling mutual funds to increase exposure.

For foreign investors, SEBI introduced a single-window digital access approach through the India Market Access portal (www.indiamarketaccess.in) and approved SWAGAT-FI, a Single Window Automatic & Generalised Access framework for trusted foreign investors.

Governance, eligibility, and SEBI’s own internal standards

SEBI said the pendency of a criminal complaint or FIR will no longer trigger an automatic disqualification for market intermediaries. This fits with the broader set of changes to the “fit and proper person” criteria, which relax automatic disqualifications while keeping safeguards.

The regulator also approved a new Code of Conduct for SEBI members. Alongside this, it approved enhanced conflict-of-interest norms, disclosures, and ethics frameworks for SEBI officials, aimed at strengthening transparency and accountability.

SEBI has also selected the SME capital-raising framework for an evidence-based review in FY27.

Key measures at a glance

Market impact and why the mix of reforms is notable

Taken together, the decisions reflect SEBI’s attempt to reduce friction in routine market processes without loosening core guardrails. Allowing mutual funds intraday borrowing addresses settlement-day operational risk, but the end-of-day repayment rule and ban on leverage are designed to keep risk contained.

Reintroducing open-market buybacks and making merchant banker involvement optional may reduce transaction costs for listed companies. But it also increases the importance of strong exchange-level checks and clear division of responsibilities among companies, auditors, and stock exchanges.

For capital formation, faster AIF launches under GARUDA and immediate launch permissions for certain schemes can shorten fundraising-to-deployment timelines. And for inclusion, the Social Impact Fund minimum investment cut to ₹1,000 stands out as a significant access-oriented step.

Conclusion

SEBI’s reforms across its 2025 and 2026 board meetings cover a wide arc: faster transmission to heirs, open-market buybacks from August 1, intraday liquidity tools for mutual funds, quicker AIF launches, and broader governance and investor-access changes. The next milestones to watch, based on SEBI’s stated timelines, include the FPI net settlement implementation by December 2026 and the evidence-based review of the SME capital-raising framework in FY27.