Description

SEBI settlement order against Navi AMC Limited and Navi Trustee Limited for exceeding permissible scheme expense limits of 2 basis points of AUM, settled for ₹10.20 lakhs.

Summary

SEBI issued a settlement order (SO/AS/PSD/2025-26/8583-8584) against Navi AMC Limited and Navi Trustee Limited for violation of Regulation 52(1) of the Mutual Funds Regulations, 1996 read with paragraph 10.1.12 of the SEBI Master Circular for Mutual Funds. The entities exceeded the permissible limit of 2 basis points of scheme AUM for scheme-related expenses during FY 2024-25. The matter was settled through suo motu settlement applications for ₹10,20,000 (Rupees Ten lakhs twenty thousand only) paid jointly and severally, without admitting or denying the violations.

Key Points

  • Navi AMC Limited (PAN: AAFCP0498M) and Navi Trustee Limited (PAN: AAFCP0412M) filed suo motu settlement applications
  • Violation: Scheme expenses exceeded 2 basis points limit of respective scheme’s AUM for FY 2024-25
  • All expenses were from AMFI’s Grey list but aggregate exceeded permissible limits
  • Settlement amount: ₹10,20,000/- paid jointly and severally
  • HPAC meeting held on August 07, 2025 recommended settlement
  • Panel of Whole Time Members approved on October 03, 2025
  • Payment confirmed on November 04, 2025
  • Settlement Applications: SA No. 8583/2025 and 8584/2025

Regulatory Changes

No new regulatory changes introduced. This order enforces existing provisions under Regulation 52(1) of SEBI (Mutual Funds) Regulations, 1996 and clause 10.1.12 of SEBI Master Circular regarding limits on scheme expenses.

Compliance Requirements

  • Mutual fund AMCs must ensure scheme-related expenses do not exceed 2 basis points of scheme AUM
  • All expenses must comply with AMFI Grey list and SEBI Master Circular provisions
  • Applicants took remedial actions including:
    • Increasing TER of 8 schemes
    • Re-visiting all expenses
    • Taking initiatives to reduce scheme-borne expenses
    • Revising minimum investment amounts
  • SEBI retains right to initiate action if settlement representations found untrue or conditions breached (Regulation 28 and 31 of Settlement Regulations)

Important Dates

  • FY 2024-25: Period of violation
  • July 23, 2025: Internal Committee meeting with applicants
  • July 29, 2025: Revised settlement terms filed
  • August 07, 2025: HPAC meeting and recommendation
  • October 03, 2025: Approval by Panel of Whole Time Members
  • October 13, 2025: Notice of Demand issued
  • November 04, 2025: Settlement amount remitted and confirmed

Impact Assessment

The impact of this settlement order is minimal on broader market operations. This is an entity-specific compliance matter involving a technical violation of expense ratio limits by Navi Mutual Fund. The applicants have already implemented remedial measures including TER adjustments across 8 schemes and expense control initiatives. The settlement amount of ₹10.20 lakhs is relatively modest, indicating the regulatory breach was not severe. The suo motu nature of the application demonstrates proactive compliance efforts. No ongoing enforcement action will be pursued against the applicants for these violations, providing closure to the matter while preserving SEBI’s rights if misrepresentations are discovered.

Impact Justification

Settlement order for a technical violation of expense limits by a mutual fund, resolved through payment. Limited market impact as remedial actions already taken and matter settled without admission of guilt.