To address concerns about the "skin in the game" rule for designated employees of mutual funds, Sebi on Thursday proposed reducing the mandatory investment percentage, applying it based on salary brackets, and excluding non-cash components like ESOPs from the minimum investment calculation. The proposals aimed at easing compliance, particularly for employees with lower CTCs and those in operational roles.

At present, AMC employees such as the CEO, CIO, and fund managers are required to invest 20 per cent of their annual salary and perks in the mutual funds they manage. This amount is locked in for three years.

In its consultation paper, Sebi has proposed that the "minimum mandatory investment amount may be reduced from 20 per cent and made applicable slab-wise, based on the CTC of the employees".