SEBI Makes Direct Mutual Fund Plans the Default on AMC Apps From 1 November: What It Means for Your SIP
From 1 November 2026, AMC websites and apps must show the cheaper direct plan by default. Here is what changes, what happens to your existing SIP, and how much a regular plan really costs.
On this page 8 sections
- 01What exactly has SEBI changed?
- 02Does it apply to Groww, Zerodha Coin, Paytm Money and other apps?
- 03What happens to my existing SIP?
- 04How much does a regular plan really cost you?
- 05Should you still choose a regular plan?
- 06What you should do now
- 07Frequently asked questions
- 08Related guides and calculators
From 1 November 2026, every mutual fund company (AMC) must show the direct plan as the default option when you invest on its own website or app. SEBI chairman Tuhin Kanta Pandey announced the change on 28 October 2026, and he added that anyone who picks a regular plan must be told it has a higher expense ratio. The fund, the portfolio and the fund manager stay the same. Only the cost changes, and over 20 years that cost can come to several lakh rupees.
In one line: if you invest on an AMC app, you now land on the cheaper direct plan by default. You can still choose a regular plan, but the app has to tell you what extra you will pay for it.
Key takeaways
- What changed: direct plans are the default on AMC digital platforms from 1 November 2026.
- Who announced it: SEBI chairman Tuhin Kanta Pandey, on 28 October 2026 in Mumbai.
- Disclosure: investors choosing a regular plan must be told about its higher expense ratio.
- Not affected: your existing SIPs and units keep running in whichever plan you chose. Nothing is switched for you.
- Why it matters: a 0.5% yearly cost gap on a ₹10,000 SIP can mean about ₹6.5 lakh less after 20 years (illustration below).
What exactly has SEBI changed?
Every mutual fund scheme in India comes in two versions:
- Regular plan: sold through a distributor, bank or broker. The AMC pays that intermediary a commission every year, and that cost sits inside the scheme’s expense ratio.
- Direct plan: bought straight from the AMC or a direct platform. There is no distributor commission, so the expense ratio is lower.
Until now, the AMC’s own app or website could show either version first. From 1 November 2026, the direct plan is pre-selected. If you switch to a regular plan, the platform must clearly tell you that it costs more. In Pandey’s words, “Protection also depends on what investors are told.”
Does it apply to Groww, Zerodha Coin, Paytm Money and other apps?
The announcement covers AMC digital platforms, meaning the fund house’s own website and app. Business Today notes that it is not yet clear whether every independent investment platform will follow the same default. Most popular investing apps already sell direct plans anyway. The change matters most when you invest through an AMC’s own site, where the regular plan used to appear first.
What happens to my existing SIP?
Nothing changes automatically. An SIP running in a regular plan keeps running in that regular plan. The new default only affects what you see when you start a fresh investment on an AMC platform.
If you want to move an existing investment to direct, it counts as a switch: the fund sells your regular-plan units and buys direct-plan units. That can trigger capital gains tax and an exit load. Our guide on direct vs regular mutual funds shows when switching is worth it.
How much does a regular plan really cost you?
The gap between the two plans of the same scheme is usually a fraction of a percent a year, but it compounds. Here is an illustration for a ₹10,000 monthly SIP held for 20 years (₹24 lakh invested). The return figures are assumptions for comparison, not a forecast.
| Scenario | Assumed yearly return | Value after 20 years | Gap vs direct |
|---|---|---|---|
| Direct plan | 12.0% | ≈ ₹99.9 lakh | — |
| Regular plan (0.5% costlier) | 11.5% | ≈ ₹93.4 lakh | ≈ ₹6.5 lakh less |
| Regular plan (1% costlier) | 11.0% | ≈ ₹87.4 lakh | ≈ ₹12.6 lakh less |
Even on a lump sum, the gap adds up. Business Today’s example: a 0.5-percentage-point difference on ₹5 lakh costs about ₹2,500 a year, before compounding. Try your own numbers in our SIP calculator.
Should you still choose a regular plan?
A regular plan is not “bad”. You pay for a service. It can make sense if:
- you want someone to pick funds, rebalance and handle paperwork for you,
- you are new to investing and would otherwise not invest at all, or
- your distributor gives real, ongoing advice and not just a one-time sale.
Direct plans suit you if you can choose funds yourself, review them once or twice a year, and stay calm when markets fall. A lower expense ratio does not guarantee better returns. Returns still depend on the portfolio and the market.
What you should do now
- Open your CAS (Consolidated Account Statement) from CAMS or KFintech and look for the word “Regular” or “Direct” in each scheme name.
- For each regular plan, compare its expense ratio with the direct plan of the same scheme on the AMC website.
- For new money, start fresh SIPs in direct plans if you are comfortable managing them.
- Before switching old units, check exit load and capital gains tax. Long-held equity units are often the cheapest to move.
Frequently asked questions
What is the SEBI direct plan default rule?
From 1 November 2026, mutual fund companies must show the direct plan as the default option on their own websites and apps. Investors who choose a regular plan must be told it has a higher expense ratio.
Will my regular plan SIP be converted to direct automatically?
No. Existing SIPs and units stay in the plan you chose. To move to direct, you must place a switch or redeem and reinvest, which can attract tax and exit load.
Is a direct plan a different fund?
No. The direct and regular plans of a scheme hold the same portfolio and have the same fund manager. Only the expense ratio, and so the NAV, differs.
Can I still buy a regular plan?
Yes. You can still choose a regular plan through a distributor, bank or adviser, or select it on the AMC platform after seeing the cost disclosure.
Related guides and calculators
- Direct vs regular mutual fund: what it costs and how to switch
- SIP calculator
- What a ₹10,000 SIP can grow to
- 1 November 2026 money rule changes
This article is for education only and is not investment, tax or legal advice. Check the official notification or speak to a SEBI-registered adviser or CA before acting.
Sources: Business Today: BT Explainer on direct plans as default · Angel One: SEBI to make direct plans the default · SEBI. Read our editorial policy.
This guide is for information only and isn’t financial advice. Rates, fees and rules change — always confirm on the official website before you decide. Read our disclaimer.
