The move is aimed at reducing the time taken by the asset management companies (AMCs) to launch these products for investors.
The FMPs and close-ended income schemes, which invest the funds collected in the debt and money market instruments, form the bulk of the new offer documents filed with Sebi.
"The asset allocations in these schemes are standard and most fund houses have such schemes," reasons a discussion paper put out by the regulator for comments and suggestions. Sebi is likely to place other mutual fund products also on the fast-track in the next stage.
"The fast-track model is framed after examining the experiences of regulators in Australia, Malaysia, the US and the UK, and customising the framework available in these countries to suit Indian needs, "Sebi said.
According to the new draft proposal, the mutual fund houses are required to place a final offer document (hard as well as soft copy), due diligence certificate from trustees with additional due diligence certificate from the compliance committee, comprising CEO of the AMC, compliance head and fund manager, along with a copy of receipt of the filing fee.
The document is then uploaded on the Sebi website. After receiving a written confirmation of the offer document from Sebi, the AMC will be free to launch the scheme.
The regulator, however, will retain the power to advise amendments, if required in the interest of investors, to the offer document.
"The File-and-Use procedure (as it is called) will reduce the time for the product offering to hit the market. Going forward, this procedure should also be applied to equity products," said Mukul Gupta, CEO, Birla Sun life Mutual fund.
A senior official in another fund house said, "Currently, Sebi takes anywhere between 30-45 days to approve FMPs and close-ended income schemes."
Most developed markets have similar models. For instance, in Australia, the prospectus is only needed to be lodged with the Australian Securities and Investments Commissions, passing the full responsibility of ensuring compliance to the product provider.
The regulator merely retains the power to require amendments to product disclosure statements and to place 'stop order' on any PDS, meaning it is incapable of accepting new investments.
The American Securities and Exchange Commission vets the document and they also do not "clear" it, once the AMC files the draft offering document.
In Korea, the mutual fund industry self-regulatory organisation goes through the proposed offer documents and after the approval, it is filed with the regulator and launched soon after.
