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Informist, Thursday, Nov. 27, 2025

 

--SEBI revises incentives to onboard new B-30, woman investors

--SEBI revises incentive framework for distributors onboarding new investors

 

AHMEDABAD - The Securities and Exchange Board of India has introduced a revised incentive framework for mutual fund distributors, aimed at expanding participation of investors from smaller cities and encouraging investments by women across the country.

 

Under the new framework, effective Feb. 1, distributors will be eligible for additional commission when they onboard two categories of new investors. These include new individual investors with fresh permanent account numbers, or PANs, from beyond Top-30, or B-30, cities at the mutual fund industry level and new women individual investors with fresh PANs from both Top-30 and B-30 cities across the country. This, SEBI suggests, could help reduce any geographical disparity in mutual fund reach and address the gap related to gender-based investment.

 

The new framework has been set up under Regulation 52(4A) of SEBI (Mutual Funds) Regulations 1996, that requires the asset management company to pay all charges, commissions, or fees related to the distribution of mutual fund schemes. This rule was introduced to ensure that the cost of distribution is borne by the AMC so that the investors do not get charged multiple times for the same service. The new structure also replaces the previous framework which was discontinued on Oct. 31 due to concerns of potential misuse.

 

The incentive structure under the new framework has now been designed to reward distributors based on investments made by the investors. For lump sum investments, distributors will receive 1% of the first application amount, up to a maximum of INR 2,000, provided the investor stays invested for at least a year. For systematic investment plans, too, distributors will earn 1% of the total investment made during the first year, again capped at INR 2,000.

 

The additional distribution commission will be funded from the 2 basis points on daily net assets that AMCs are mandated to keep aside annually for investor education, awareness and financial inclusion initiatives.

 

Certain scheme categories such as exchange traded funds, domestic fund of funds with more than 80% assets under management invested in domestic funds and schemes with duration requirements of less than one year, such as overnight, liquid, ultra-short duration and low-duration funds, have been exempt from any additional commissions.

 

SEBI has also mandated the Association of Mutual Funds in India to issue requisite implementation standards within 30 days of the circular.  End

 

Reported by Sunil Raghu

Edited by Deepshikha Bhardwaj

 

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