"This development would lead to setting up of distribution infrastructure by AMCs," SEBI said.

In order to achieve participation from all parts of the country in mutual funds, SEBI said "there is greater need for developing additional distribution channels."

SEBI has asked mutual funds to develop a system for active support to PSU banks for distribution of mutual funds.

Besides, all MFs would need to provide online investment facility and tap the internet and mobile phone users for direct distribution of products.

The regulator has asked fund houses to make available printed literature in regional languages for investor education and financial inclusion. Such regional language investor awareness campaigns would also be introduced in print and electronic media.

Currently, there are about 45 fund houses in the country, which together manage assets worth over Rs 9 lakh crore but fund mobilisation has been a tough task for them in the past few years.

Unless the funds are deployed in short term deposits of scheduled commercial banks, fund houses need not include those particular allocation for calculating sectoral exposures.

"Since the investments in short term deposits of scheduled commercial banks is allowed pending deployment of funds of a scheme the same shall also be excluded while calculating sector exposure," the circular said.

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