Bringing new investors MFDs to get incentives of up to Rs.2,000..!
By Mr. Yaseen Sahar, Financial
Expert
From February 01, 2025, SEBI has allowed incentives for new individual
investors from B-30 cities, and new women individual investors from both T-30
and B-30 cities.
In a major move to deepen financial inclusion and broaden the retail
investor base, SEBI has introduced a revamped incentive structure for mutual
fund distributors (MFDs).
With this, SEBI has allowed fund houses to pay additional incentive of
up to Rs.2000 to MFDs for bringing in new women investors and investors from
B30 cities.
The new framework will come into effect from February 1, 2026.
B-30 incentive framework reworked after misuse concerns..
Earlier, distributors received additional incentives for mobilizing
investments from beyond the top 30 cities. However, SEBI discontinued this
after receiving industry feedback and observing instances of misuse.
The regulator SEBI has now reset the incentive structure, retaining
the intent but tightening the design and funding mechanism.
Under the new norms, SEBI has kept a cap on the payable commission and
also defined the applicability of these new norms.
Who qualifies for the new incentives?
The incentives will now be paid only for two categories of new investors
while this new investor is defined at the PAN level:
1. New individual
investors from B-30 cities
2. New women individual
investors from both T-30 and B-30 cities.
How much will distributors get?
SEBI has standardized the incentive model across AMCs:
For lump-sum investments
·
Commission of 1% of the first application amount
·
The commission is capped at Rs.2,000
·
Investor must stay invested for minimum one year
For SIPs
·
Commission of 1% of total first-year SIP contributions
·
The commission is capped at Rs.2,000
Paid from investor education corpus, not scheme expenses
In a major shift, SEBI has mandated that these incentives will be funded
from the 2-bps investor education and awareness corpus, not from scheme TERs.
No dual incentives
SEBI has also said that the distributors cannot claim incentives twice
for the same woman investor. If she is from a B-30 city, only one category,
either ‘B-30’ or ‘women’, can be used.
Schemes excluded from this incentive
As per the circular, the schemes that cannot pay additional commissions
include:
·
ETFs
·
Domestic FoFs with >80% AUM in domestic funds
·
Short-duration schemes with less than 1 year maturity including
Overnight Fund, Liquid Fund, Ultra Short Duration Fund and Low Duration Fund
AMFI to operationalize rules in 30 days
To ensure uniformity, SEBI has also clarified that AMFI will publish
detailed implementation standards within 30 days.
No fundamental attribute change
SEBI has clarified
that changes in scheme offer documents due to the revised incentive structure
will not be treated as a fundamental attribute change.
Mr. Yaseen Sahar has been reached at rahas84@gmail.com and 98433 13512
Read articles written by Mr. Yaseen Sahar, Financial Expert in
Nanayam Vikatan, Aval Vikatan and Vikatan.com a leading personal finance
magazine : https://bit.ly/4mcEqWq
Yaseen Sahar is an investment strategist and author focused on asset
allocation, mutual funds, and wealth creation. He writes extensively on
financial markets, macroeconomics, and long-term investment strategy. Views are
his personal.
