Securities and Exchange Board of India (Sebi)'s proposal to allow endorsements by celebrities, including influencers, by mutual fund houses is facing resistance from sections of the industry, with executives warning that the move could encourage mis-selling among retail investors while tilting the competitive landscape further in favour of larger asset managers.
In a consultation paper issued last week, the markets regulator proposed a common advertisement code for Sebi-regulated entities such as mutual funds, brokers, investment advisors, research analysts, and so on. One of the recommendations was to allow celebrity endorsements, on a pre-approved basis, for asset management companies (AMCs), a provision restricted for only industry-level advertisements at present.
The move has drawn criticism from industry executives who said celebrity-driven advertising risks encouraging investors to choose fund houses based on familiarity and star appeal, rather than investment performance, fund management capabilities or long-term track records.
“People are likely to get easily swayed towards a fund house without looking at their actual credentials. Cases of mis-selling may also go up if such a scenario plays out," said a senior mutual fund executive, requesting anonymity.
The concerns stem from the idea that investors often develop an affinity towards public personalities, making celebrity-led campaigns particularly influential.
The industry is also concerned that the proposal could widen the gap between large and small asset managers by triggering a race for celebrity endorsements. "Bigger AMCs, who have a larger cash pile, are likely to bombard the industry with celebrity ads. There would be no equal opportunity for smaller AMCs. Costs for all mutual funds will go up, depending on the celebrity they onboard," said the person cited above.
"We are not happy about this consultation paper and are not in favour of this, as it will substantially increase costs for all mutual funds. Every fund house would be forced to onboard celebrities, and as a result, the costs would go up," said a second AMC executive.
At present, mutual funds are allowed to issue advertisements without the use of ranking or ratings as well as any claims of ‘risk-free’ returns. Celebrity endorsements are only permitted at an industry level, most frequently used by the industry body Association of Mutual Funds in India (Amfi) to promote mutual funds as a product. Such advertisements can be used only with prior Sebi approval.
The proposal restricts celebrity endorsements to the AMC's brand and allows only a factual mention of the products or services it offers. Celebrities cannot promote, recommend or make claims about any specific mutual fund scheme or other regulated service.
Advertising budgets at some of the country's largest fund houses have already risen sharply. SBI Mutual Fund spent ₹67.8 crore on advertising, publicity and business promotion in FY26, up 42% from ₹47.7 crore a year earlier, according to its annual report for fiscal 2026. HDFC Mutual Fund's spending rose 15% to ₹53.5 crore, while UTI Mutual Fund increased such expenditure by 37% to ₹21.5 crore.
Who is a celebrity
Under the new framework, Sebi has also proposed a broad definition of a ‘celebrity’ that extends well beyond film stars and sportspersons.
The term would include people featured in the top 50 of any recognized celebrity index, lead actors in films, television shows or web series, sportspersons who have represented their country, television hosts and reality show winners. It would also cover social media influencers with over 500,000 followers on a single platform and virtual influencers or avatars.
Industry executives said the inclusion of influencers significantly expands the scope of the proposal and raises concerns over monitoring compliance across multiple digital platforms.
The proposal also marks a departure from Sebi’s stricter stance against influencers promoting financial content on social media without the mandatory investment advisory or research analyst certification.
“The risk of halo transfer would remain, where a viewer who trusts a creator's food recommendations, travel choices, or lifestyle cues will unconsciously extend that trust to their financial endorsements, even though the creator's popularity has zero bearing on a fund's expense ratio, consistency of returns, or exit load structure,” said Sarthak Ahuja, director at Niamh Ventures LLC. Ahuja runs several social media handles with a combined following of about 4 million people across Youtube and Instagram.
“Allowing only accredited or licensed creators to operate in this domain as part of the regulation is necessary,” Ahuja said.
However, the proposal is expected to help mutual funds expand their reach and broaden their investor base. Dhirendra Kumar, founder and chief executive officer of Value Research, said celebrity endorsements could expand mutual fund penetration if implemented within Sebi's proposed safeguards.
"These norms can bring in a new class of retail investors who hold no mutual funds today. That is good for investors and fund houses alike. For most people, a mutual fund is a better route than picking stocks directly. Celebrity endorsements can amplify that message and widen the funnel,” said Kumar.
Mutual fund assets have grown to ₹81.6 trillion as of end May, up 40% from two years ago. During the same period, the number of MF folios has risen to 270 million from 180 million in May 2024.