Motilal Oswal Asset Management Company (AMC) has announced a temporary halt on all fresh inflows into its Motilal Oswal Nifty Microcap 250 Index Fund, effective from January 8, 2026. This significant move impacts new lump sum investments, switch-in transactions, and new registrations for Systematic Investment Plans (SIPs) and Systematic Transfer Plans (STPs). Existing SIPs and STPs will also be paused from the effective date, with any subscription amounts received after the cut-off time on January 8, 2026, being refunded to investors without interest. The decision by Motilal Oswal AMC stems from recent discussions and consultations with the Securities and Exchange Board of India (SEBI). The primary reason cited is that SEBI's existing regulatory framework for mutual fund categorization does not formally recognize 'micro-cap' as a standalone category based on market capitalization. This regulatory alignment issue necessitated the pause in fresh subscriptions. Several credible financial news outlets, including Value Research, Whalesbook, Upstox, and The Economic Times, have widely reported and corroborated this development. SEBI has previously expressed caution regarding mutual fund investments in micro-cap companies, highlighting the inherent risks in this segment. While new investments are halted, existing investors in the Motilal Oswal Nifty Microcap 250 Index Fund are not impacted in terms of holding or selling their units, and the fund will continue to track its benchmark. The AMC has indicated it is actively discussing the path forward with the regulator to resolve the categorization matter.