The Securities and Exchange Board of India (SEBI) has postponed the implementation of its new incentive framework designed for mutual fund distributors. The scheme aims to encourage greater investment from smaller towns and from women investors across the country.

Revised Effective Date

In its latest circular, SEBI announced that the framework—earlier slated to take effect on February 1, 2026—will now become applicable from March 1, 2026. The incentive mechanism was originally introduced through a circular issued on November 27, 2025.

The programme seeks to broaden mutual fund participation by rewarding distributors who bring in:

• new individual investors (new PAN) from B-30 cities, and
• new women investors (new PAN) across both T-30 and B-30 cities

Extension Driven by Industry Inputs

SEBI stated that the deferment follows representations from industry stakeholders who flagged operational and system-related challenges in meeting the earlier deadline. The regulator also clarified that all other conditions and provisions of the November circular remain unchanged.

The additional month is expected to help AMCs, mutual funds, trustees, and RTAs put the required processes and technology infrastructure in place before implementation.

Highlights of the Incentive Framework

Under the proposed structure:

• AMCs will bear the cost of the additional incentive
• the incentive is capped at 1% of the lump-sum investment or total SIP contributions in the first year
• a maximum of ₹2,000 may be paid per eligible new investor
• the funds will be drawn from the existing 2 basis points set aside annually for investor education and inclusion
• payouts will be over and above regular trail commissions

The initiative is intended to nudge distributors to reach underserved demographics and expand the retail investor base in mutual funds.

Summary

SEBI has extended the implementation date of its distributor incentive framework from February 1 to March 1, 2026. The programme rewards distributors for sourcing investments from B-30 city investors and new women investors nationwide. The postponement follows industry feedback about operational readiness. Key features include AMC-funded incentives, a 1% cap on eligible investments, and a maximum payout of ₹2,000 per new investor, funded from the existing investor education allocation, in addition to regular trail commissions.

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