Sebi extends timeline till Mar 1 to implement additional incentives structure for MF distributors

Markets regulator Sebi on Wednesday extended the timeline till March 1 for the implementation of an additional incentives structure for mutual fund distributors for onboarding new individual investors from B-30 cities and new women investors from any city.

Earlier, the new incentive structure, aimed at promoting wider outreach and awareness, was scheduled to be effective from February 1, 2026.

According to the classification used in the mutual fund industry, B-30 refers to places beyond the top 30 cities.

Based on the feedback received from the industry, citing operational difficulties in putting in place the requisite systems and processes for smooth implementation of the additional incentive structure, Sebi has decided to extend the implementation timeline.

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 (AMCs) will pay these distributors 1 per cent 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, Sebi 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.