After nearly three years of deliberations, the Indian markets regulator on Wednesday allowed private equity firms to serve as promoters of Indian mutual funds, in a move that may accelerate consolidation in the country’s ₹41 trillion mutual fund industry.

The board of Securities and Exchange Board of India (Sebi) also approved a range of proposals related to mutual fund sponsorship,

ASBA-like infrastructure for secondary markets, debt fund backstop facility, and environmental, social, and governance (ESG) promotion in Indian listed companies, aligning India’s practices with global standards.

Clearing the way for private equity funds to become sponsors of mutual funds opens a new business line for them in India’s fast-growing mutual fund industry. PE funds can now set up mutual funds independently or in collaboration with other firms under the approved framework.