Bangalore: Following the recent move by mutual fund (MF) houses to increase the lock-in period to three years, the Securities and Exchange Board of India (Sebi) has asked them to reduce it back to one year. The lock-in period is the time before which investors will have to pay a penalty for exiting a scheme. The fund houses had increased the lock-in period following a Sebi directive to scrap entry loads for MF investments from August 1, 2009. The regulator had also capped the portion of exit load that could be used for asset management expenses at one percent. According to Mint, some fund houses faced with loss of income from the entry load, had increased the applicability of exit load fees to three years instead of the earlier 6-12 months, raising the cost of exiting a scheme. However, the move was seen by the regulator as being unfair to retail investors since the exit load was not applicable for investors who put in at least 5 crore, as per Sebi norms. Investors with large amounts but less than 5 crore could bargain for a lower exit load, thus laying the maximum burden on small investors.