To curb mis-selling, mutual funds will have to label and colour code their schemes to indicate risk to capital invested.
Blue, yellow and brown will indicate low, medium and high risk to invested capital, said SEBI.
Fund houses would now be required to label the scheme according to nature (wealth creation, regular income), time horizon (short-/ medium- /long-term), investment objective followed by asset class and finally the risk using colour codes.
The product label has to be disclosed in the scheme document, applications and advertisements. This circular comes into effect for all schemes effective July 1.