Direct is now the default. Regular comes with a price tag
From 1 November, a fund house’s own app opens on the Direct plan. The gap to Regular is about ₹1.2 lakh a year on ₹1 crore. SEBI hasn’t published the rule itself yet.
SEBI chairman Tuhin Kanta Pandey said on 28 October 2026 that from 1 November, Direct plans will be the default option on asset management companies' digital platforms, and investors choosing a Regular plan will be told about its higher expense ratio. As of 29 October, SEBI had not published a circular on it. In AMFI's October 2026 data, the median flexi cap scheme charges 2.19% a year on its Regular plan and 0.96% on its Direct plan, a gap of ₹1.23 lakh a year on ₹1 crore.
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SEBI chairman Tuhin Kanta Pandey said on Wednesday, 28 October 2026, that from 1 November, Direct plans will be the default option on the digital platforms of asset management companies. Investors who choose a Regular plan there will be told about its higher expense ratio, Moneycontrol reported.
As of 29 October, SEBI's website lists no circular on the change. The circular, when it comes, will set out the exact wording, which platforms it covers and how the cost is to be shown. This piece covers what is already in SEBI's rules and AMFI's data.
Same fund, two prices
Most mutual fund schemes in India have two plans, Direct and Regular. They hold the same portfolio and have the same fund manager.
SEBI's circular of 13 September 2012 made fund houses offer a separate plan for direct investments from 1 January 2013. That plan has a lower expense ratio, because it leaves out distribution expenses and commission.
A Regular plan is the one sold through a distributor. Its higher expense ratio pays the distributor's commission, every year the money stays invested.
The rule you never saw on the form
Every scheme document already carries a table for applications that leave the choice unclear. The pattern is the same across fund houses. This is from a scheme information document filed with SEBI in March 2026.
| Distributor code on the form | Plan written by the investor | Plan the application goes into |
|---|---|---|
| None | None | Direct |
| None | Regular | Direct |
| Given | None | Regular |
| Given | Regular | Regular |
| Given | Direct | Direct |
So a form with no distributor code goes into the Direct plan even if it says Regular. A form with a distributor code and no plan goes into Regular.
The change Mr Pandey described is about the screen. On a fund house's own website or app, the plan already selected will be Direct.
What the other button costs
AMFI publishes each scheme's total expense ratio for both plans. Its October 2026 file covers 2,165 schemes. The figures below are the median scheme in each category, the one in the middle when schemes are ranked by expense ratio.
| Category | Regular plan | Direct plan | Gap | On ₹1 crore, a year |
|---|---|---|---|---|
| Flexi cap | 2.19% | 0.96% | 1.23% | ₹1.23 lakh |
| Large cap | 2.21% | 1.07% | 1.08% | ₹1.08 lakh |
| Mid cap | 2.02% | 0.94% | 1.10% | ₹1.10 lakh |
| Small cap | 2.05% | 0.91% | 1.18% | ₹1.18 lakh |
| Balanced advantage | 2.30% | 1.04% | 1.27% | ₹1.27 lakh |
| Equity index funds | 1.04% | 0.42% | 0.50% | ₹50,000 |
| Liquid | 0.25% | 0.14% | 0.10% | ₹10,000 |
The gap is the median of each scheme's own difference, so it need not equal the first column minus the second.
The expense ratio comes out of the fund's value every day. It never shows up as a separate charge on a statement. As the holding grows, the rupee amount of the gap grows with it.
Compound looked at the commission side in What a regular plan pays your distributor, from AMFI's own file.
What the extra 1% pays for
The commission pays a distributor for the work they do. That can include choosing funds, handling paperwork, reminders and keeping an investor invested through a falling market. Whether that is worth about 1% a year is each investor's call.
The change described for 1 November leaves both plans in place. It changes the plan a fund house's own screen starts on, and it adds a line about cost when someone picks Regular.
The circular hasn’t landed yet
- The circular. The exact rule, its wording and its start date will be in it.
- Other platforms. The remarks as reported concern fund houses' own digital platforms. Distributors, brokers, banks and investment apps were not mentioned.
- What the cost line says. Whether it shows a percentage, a rupee amount or both.
Your own funds
A CAS shows whether each holding is in a Direct or Regular plan, and the distributor code for each folio. Reva reads both from your statement and shows each Regular plan's expense ratio against its Direct plan's, from AMFI's file.
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Questions
- Will Direct plans become the default for mutual funds from 1 November 2026?
- SEBI chairman Tuhin Kanta Pandey said on 28 October 2026 that Direct plans will be the default option on asset management companies' digital platforms from 1 November. As of 29 October, SEBI had not published a circular on it.
- What is the difference between a Direct and a Regular mutual fund plan?
- Both hold the same portfolio. A Direct plan has a lower expense ratio because it leaves out distribution expenses and commission, under SEBI's circular of 13 September 2012. A Regular plan is sold through a distributor and pays their commission.
- How much more does a Regular plan cost?
- In AMFI's October 2026 data, the median flexi cap scheme charges 2.19% a year on its Regular plan and 0.96% on Direct, a gap of 1.23%. For equity index funds the median gap is 0.50%, and for liquid funds 0.10%.
- What happens if I don't choose a plan on a mutual fund form?
- Scheme documents say a form with no distributor code goes into the Direct plan, and a form with a distributor code but no plan goes into the Regular plan.
- Do existing Regular plan investments change on 1 November?
- SEBI has not published the rule yet. The remarks as reported concern the default option on fund houses' digital platforms, and both plans continue to exist.
Sources
- Moneycontrol, SEBI to make Direct Plans default on AMC digital platforms from November 1, says Tuhin Kanta Pandey (28 Oct 2026)
- SEBI, circulars listing, checked 29 Oct 2026
- SEBI circular CIR/IMD/DF/21/2012, separate plan for direct investments from 1 Jan 2013 (13 Sep 2012)
- Scheme Information Document filed with SEBI, default plan scenarios (March 2026)
- AMFI, Total Expense Ratio of mutual fund schemes, October 2026
Compound is analysis, not investment advice. Reva Money is not a SEBI-registered investment adviser.
