BENGALURU, July 1 (Reuters) - India's market regulator

proposed a series of easier rules for passively managed mutual

fund schemes on Monday, looking to reduce the compliance burden,

encourage competition and ease the entry of funds seeking to

launch only less risky schemes.

The proposed rules could be an incentive for asset managers

like Vanguard to enter the Indian market. Last July, Blackrock ( BLK )

, the world's largest money manager, tied up with Mukesh

Ambani's Jio Financial Services, to launch a fund

house in the country.

Fund houses can hive off their passive mutual fund schemes

-- which replicate indexes and leave less discretion for fund

managers -- to adhere to less strict rules and reduce compliance

costs, the Securities and Exchange Board of India (SEBI)

proposed in a paper seeking comments.

Passive funds will have relaxed portfolio disclosure

requirements, scheme disclosures and advertising code, the

regulator said.

The SEBI is also seeking to reduce the net worth requirement

for asset managers managing only passive schemes to 350 million

rupees ($4.20 million) from 500 million rupees earlier.

It proposed lowering that requirement further to 250 million

rupees if the asset manager was profitable for the past five

years.

The regulator has also proposed introducing hybrid passive

funds, which will replicate a composite index comprising fixed

proportions of equity and debt, the paper said.

The SEBI has invited comments on the proposals until July

22.

($1 = 83.4301 Indian rupees)