Sebi has amended mutual fund rules to remove the applicability of the definition of "associate" to sponsors that invest in various companies on behalf of the beneficiaries of insurance policies.

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The new rules will become effective from September 3, the Securities and Exchange Board of India (Sebi) said in a notification.

The regulator's board approved the proposal last month.

"The definition of associate shall not be applicable to such sponsors, which invest in various companies on behalf of the beneficiaries of insurance policies or such other schemes," the regulator said.

Under the rules, associate includes a person who directly or indirectly, by himself, or in combination with relatives, exercises control over the Asset Management Company (AMC) or the trustee, among others.

At present, there are 43 mutual fund houses, which together manage assets worth nearly Rs 38 lakh crore.