Economic growth is facilitated by a sound financial system.“Mutual funds are one of the main sources of capital flows to emerging economies”.“The Securities and Exchange Board of India (SEBI) is the highly powerful capital market regulator in the country and it regulates mutual funds”. The regulatory mechanism for mutual funds is quite strong in India. 11th September 2020 is a significant day for equity multi-cap funds in India. SEBI came out with a circular on that day for equity multi-cap funds. The present study endeavours to critically assess the impact of that circular on equity multi-cap funds. The study is exploratory and uses secondary data. The number of equity multi-cap funds reduced drastically after the regulatory circular. Nevertheless, one notable thing is that many fund houses launched schemes under the category of equity multi-cap funds even after this circular. The results reveal that the AUM of the two big funds (Nippon India Multi-Cap Fund and ICICI Pru Multi-cap Fund) has increased and the expense ratio has decreased in February 2022 in comparison to December 2020. The returns generated by these funds were spectacular also. As such, the impact of the circular should not be treated as a negative one for equity multi-cap funds.