BANKING & FINANCE
SEBI
SEBI Expands Mutual Fund Categories to 40 and Tightens Naming Norms
The Securities and Exchange Board of India (SEBI) has overhauled the 2017 mutual fund categorization, increasing the total number of categories from 36 to 40.
Key additions include 'Life-Cycle Funds', which utilize age-based asset allocation, and 'Sectoral Debt Funds' focused on specific fixed-income themes.
A 'True-to-Label' naming rule has been enforced, requiring scheme names to clearly reflect their category and prohibiting terms that only highlight potential returns.
SEBI has also increased the minimum equity allocation for Dividend Yield, Value, and Contra funds to 80%, up from the previous 65%.
Perspective: This regulatory shift aims to reduce portfolio overlap, prevent misleading branding, and provide retail investors with clearer choices based on their risk profile and age.
Key additions include 'Life-Cycle Funds', which utilize age-based asset allocation, and 'Sectoral Debt Funds' focused on specific fixed-income themes.
A 'True-to-Label' naming rule has been enforced, requiring scheme names to clearly reflect their category and prohibiting terms that only highlight potential returns.
SEBI has also increased the minimum equity allocation for Dividend Yield, Value, and Contra funds to 80%, up from the previous 65%.
Perspective: This regulatory shift aims to reduce portfolio overlap, prevent misleading branding, and provide retail investors with clearer choices based on their risk profile and age.
Key Facts / Static GK
SEBI Establishment: 1988 (Statutory status in 1992)
Headquarters: Mumbai
Chairperson: Madhabi Puri Buch
First Life Cycle Funds limit per AMC: 6 funds at a time
Headquarters: Mumbai
Chairperson: Madhabi Puri Buch
First Life Cycle Funds limit per AMC: 6 funds at a time
Practice Quiz — 5 March 2026
Q1. Which of the following statements regarding the new Risk-Based Premium (RBP) framework is incorrect?
Answer: (C) The framework introduces a uniform risk-based incentive of 50% for all high-performing banks. — Statement C is incorrect because the maximum risk-based incentive is capped at 33.33%, not 50%. Additionally, a vintage incentive of up to 25% is provided for long-term distress-free contributions.
Q2. Under the new SEBI framework, what is the revised minimum equity allocation required for Dividend Yield and Value funds?
Answer: (D) 80% — SEBI has increased the minimum equity allocation for Dividend Yield Funds, Value Funds, and Contra Funds to 80%, compared to the earlier requirement of 65%.
Q3. What is the primary objective of the Bilateral Swap Arrangement (BSA) between India and Japan?
Answer: (B) To provide a financial safety net and enhance bilateral financial cooperation. — The BSA is a two-way currency swap framework designed to strengthen financial safety nets, promote regional/global stability, and enhance bilateral financial cooperation by allowing local currency exchange for US Dollars during liquidity stress.
Q4. The LKR 3 billion Blue Bond issued by DFCC Bank Plc will primarily fund which of the following activities?
Answer: (B) Sustainable fisheries and marine conservation projects. — Blue Bonds are specialized financial instruments designed to fund marine conservation, sustainable fisheries, ocean-based economic development, and clean water projects.
Q5. Regarding the Delhi Lakhpati Bitiya Yojana, which of the following eligibility criteria is mentioned?
Answer: (D) The benefit is limited to a maximum of two living girl children per family. — According to the scheme details, it is limited to two living girl children per family. Other criteria include an income limit of Rs 1.20 lakh, being born in Delhi, and a minimum of three years of residence in Delhi.
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