1Finance gets regulatory approval to launch passive-only mutual fund business

1Finance has cleared a significant regulatory milestone after securing in-principle clearance from Sebi to launch a passive-only mutual fund business. The approval positions the wealth-tech firm to potentially become the first asset management company to operate under Sebi's recently introduced framework for specialized fund houses.

The company intends to establish its fund house, branded as MF Lite, with a focused mandate on passive investment strategies. The launch timeline is set for Q4FY27, contingent on the completion of all remaining regulatory prerequisites and procedural requirements mandated by Sebi.

The new framework represents Sebi's initiative to facilitate specialized investment vehicles with narrowed mandates, allowing lighter operational structures compared to traditional full-service asset management companies. 1Finance's venture into the passive segment aligns with growing investor interest in low-cost index and exchange-traded fund options across Indian markets.

The approval underscores the regulator's effort to diversify the mutual fund industry landscape and reduce barriers to entry for niche investment strategies. As passive investing continues gaining traction among retail and institutional investors in India, specialized platforms focusing on this segment are expected to capture growing market demand.