Who protects your money: SEBI, AMFI and what to do when something goes wrong
What SEBI and AMFI actually do, what a registration does and does not mean, and the exact order in which to escalate a complaint until it is answered.
Nobody promises you a profit on a market-linked investment. What you are given instead is machinery: a regulator with legal powers, an industry body with a code of conduct, a fund structure built so that no single organisation holds your money and also decides what happens to it, and a complaint route that does not end at the person who upset you.
This page explains that machinery, and then gives you the escalation ladder in order, with what to have ready at each step. It is the part of mutual fund basics worth knowing before you need it rather than after.
Who SEBI is and what it does
SEBI is the Securities and Exchange Board of India, the statutory regulator for the securities market. It was set up by an Act of Parliament, and it has powers a trade body cannot have: it writes binding regulations, inspects the organisations it registers, investigates, fines, bars people from the market and refers matters for prosecution.
Most of this happens long before you have a problem. SEBI decides what a scheme may be and may hold, what must be disclosed and how often, how net asset value is calculated and which day’s price your money gets, and how quickly you must be paid when you redeem — with interest payable if the fund house is late. It also runs the complaint portal where the entity you complain about is obliged to answer you. Those timelines differ by scheme type and have changed over the years, so read the current ones in the scheme document or on sebi.gov.in.
What SEBI does not do
SEBI does not choose investments for you, does not vet whether a scheme suits you, and does not stand behind anybody’s money. If your units fall in value because markets fell, no rule has been broken and there is nothing to complain about. SEBI’s job is that the process was honest, the disclosure complete and the rules followed — not that the outcome was good.
What AMFI is, and how an industry body differs
AMFI, the Association of Mutual Funds in India, is not a regulator. It is an industry body whose members are the fund houses themselves. Its authority comes from membership and from SEBI requiring certain things to be done through it, not from statute, so it cannot fine you, bar you or prosecute anybody.
What it does do is real. It issues the ARN that every mutual fund distributor must hold, and can suspend or cancel one for breaching the code of conduct it maintains. It also publishes industry data and runs investor education programmes.
SEBI makes and enforces the rules, and is the address when you want one enforced.
AMFI organises the industry and polices its distributors’ conduct, and is the first stop when you want to check or report a distributor.
What a registration means, and what it does not
This is where most misunderstanding lives.
What SEBI registering a mutual fund means
The fund house met SEBI’s eligibility conditions.
The scheme was filed and allowed to launch.
The operation is subject to SEBI’s regulations and inspection.
What it does not mean
It does not mean SEBI has approved, endorsed or recommended the scheme — SEBI itself says so in the standard wording on scheme documents.
A registration is a licence to operate under rules, not a quality rating.
An ARN means the holder passed the required certification examination, is registered with AMFI, and is bound by its code of conduct. It does not mean the person is registered to recommend investments for a fee, to manage money on your behalf, or to hold your money; those are separate registrations SEBI gives to different kinds of professional. A distributor helps you transact and service the account and is paid a commission by the fund house out of the scheme’s expenses — which is why the disclosures page exists.
And no registration anywhere does the thing people most want it to do.
No regulator, no industry body and no registration guarantees that you will get your money back or that it will grow. There is no deposit insurance over a mutual fund and no government backstop. What it does protect is still valuable: your money went where it should, the records are correct, the costs and holdings are disclosed honestly, and somebody is obliged to answer you.
The structure that protects you inside a fund
A mutual fund is deliberately split into four organisations, so no one of them can quietly do as it likes.
4
separate organisations in a mutual fund's structure
The fund house, the trustees, the custodian and the registrar — separated on purpose
The trustees
A mutual fund is set up as a trust, and your money legally belongs to that trust, not to the fund house. The trustees’ statutory job is to supervise the fund house on investors’ behalf, check that each scheme does what its documents say, and report to SEBI on it.
They are separate from the asset management company — a supervisor who answers to you, not to the people whose work they check.
The custodian
The shares and bonds a scheme buys are not kept by the fund house. They sit with a custodian, a separate SEBI-registered institution whose only function is safekeeping.
Even if a fund house collapsed tomorrow, the securities would still be with the custodian in the scheme’s name. This is the most important structural fact about a mutual fund: the people managing the money are not the people holding it.
The registrar
A registrar and transfer agent keeps the ownership records. Your statement, your bank-detail change and your nominee registration all go through it.
Where your money travels
Your payment goes to the scheme’s own collection account, or through an exchange platform used for the transaction.
Never to a distributor, never to an individual’s account, never to an app wallet, and your bank statement will show that.
What you are entitled to, as a matter of right
These are not favours. If you do not get them, you have something to complain about.
The grievance ladder, in order
Four rungs, and what to have ready at each
- The fund house. Complain in writing to the fund house’s investor relations officer or grievance officer, whose name, email and address are on its website and in the scheme documents. Write rather than telephone, so there is a record. State plainly what you want done, and ask for a written reply and a complaint reference number. Give it a reasonable period in writing — a fortnight is fair for most service matters — and say that you will escalate after that. Have ready: your folio number, PAN, the scheme name, the date and amount of the transaction in dispute, the bank account involved, and copies of your statement.
- The registrar. If it is a records matter — a statement that will not come, a bank change not reflected, a nominee not appearing, a folio that will not consolidate — the registrar holds the record, so write to the registrar too, quoting the fund house reference. Have ready: the same documents, plus the Step 1 reference and the dates you wrote and did not hear back.
- SEBI SCORES. SCORES is SEBI’s own complaint portal, at scores.sebi.gov.in. The portal states that investors must first take the grievance up with the entity concerned, which is why Step 1 comes first. You register once — you can pull your details from your KYC registration agency — then lodge the complaint by choosing a category, describing the grievance and naming the SEBI-regulated entity. The entity is then obliged to respond on the portal with an Action Taken Report. Have ready: the Step 1 reference and dates, every document you sent, the entity’s reply if you got one, and a short factual statement — what happened and what you want.
- SMART ODR. SMART ODR, at smartodr.in, is the securities market’s online dispute resolution portal, operated jointly by the market infrastructure institutions. It handles disputes through online conciliation and, if conciliation does not settle the matter, online arbitration. Here your dispute becomes a case decided by a neutral third party: conciliation first, arbitration after. Have ready: the full file — your original complaint, the entity’s replies, the SCORES reference, and the relief you want, stated as an amount or an action.
The windows, the limits, and what SCORES will not take
If an Action Taken Report does not satisfy you, SCORES provides two levels of review. Each has its own short window running from the date you receive the previous outcome, so read them on the portal when your report arrives rather than relying on this page.
SCORES does not take suggestions, requests for information, matters already before a court, or disputes already running in an online dispute resolution mechanism. SCORES and SMART ODR are linked and the same dispute does not run in both at once, so choose the route rather than filing everywhere at once. Fee and eligibility conditions apply on SMART ODR and change, so read the current ones on the portal first.
Other products have other ladders
The ladder above covers the securities market. Other products sit with other regulators, and complaining in the wrong place loses you weeks.
| If the dispute is about | Complain to the entity first, then |
|---|---|
| A bank, an NBFC or a payment instrument | The Reserve Bank’s integrated ombudsman scheme, via rbi.org.in |
| A life or health insurance policy | The insurance regulator’s grievance system, then the insurance ombudsman for your region |
| NPS or a pension scheme | The pension regulator’s grievance system and the ombudsman it provides for |
The pattern is the same each time: the entity, then the regulator’s own complaint system, then an ombudsman or arbitration. Confirm the current names and forms on that regulator’s own site.
When somebody promises you a return
No market-linked investment can promise a number, and no registration permits anybody to do so. Treat the promise itself as the warning, whatever credentials come attached to it.
If you have already paid, act the same day. Tell your bank and ask for the transfer to be recalled, lodge a police complaint — cyber-crime complaints can be filed online — and report it on SCORES if a SEBI-registered entity was involved. Keep every message, and pay nothing more on the promise of recovering what you have lost.
How to check that somebody is registered
Do this before money moves, yourself, not through a link the person sends you.
A sensible next step
Open your consolidated account statement, check the nominee and your contact details on every folio, and save the grievance officer’s email address for each fund house you hold — so that if you ever need Step 1, you are not looking for it in a hurry.