SEBI Defers Rollout of Additional Incentive Structure For MF Distributors To March
SEBI postponed the rollout after the industry flagged operational challenges in setting up the necessary systems and processes to ensure a smooth transition.
The Securities and Exchange Board of India on Wednesday extended the deadline for implementing the additional incentive structure for mutual fund distributors to March. The framework is designed to encourage the onboarding of new individual investors from locations beyond the top 30 urban centres as well as new women investors across all cities.
The incentive plan was earlier scheduled to come into effect on Feb. 1. However, the market regulator postponed the rollout after the industry flagged operational challenges in setting up the necessary systems and processes to ensure a smooth transition.
SEBI said the extension was granted based on feedback from market participants who sought more time to align their internal infrastructure with the new requirements, which aim to promote wider investor outreach and deepen financial inclusion.
Accordingly, the new provisions will now come into effect from March 1, 2026, SEBI said in its circular.
Under the new framework, asset management companies will pay these distributors 1% of the first lump-sum investment or the first-year SIP amount, up to Rs 2,000, provided the investor stays invested for at least a year.
This commission will come from the 2 basis points AMCs already set aside for investor education, and will be paid over and above existing trail commissions.
However, no dual incentives will be allowed for the same woman investor from B-30 cities. The additional commission will not apply to ETFs, certain Fund of Funds, and very short-duration schemes like overnight, liquid, ultra-short, and low-duration funds.
"The mutual fund distributors shall be eligible for additional commission (for bringing) -- new individual investors (new PAN) from B-30 cities, at the mutual fund industry level; and New women individual investors (new PAN) from both top 30 and B-30 cities," SEBI had stated.
Earlier, the regulator had provided a framework for incentivising distributors for new investment/inflows from beyond the top 30 cities (B-30 cities). However, due to concerns of misuse of this framework, based on the feedback received from the industry, the regulator has decided to revise the incentive structure for distributors for bringing in new investment in the mutual funds.
