SEBI Proposes Gift Cards for Mutual Fund Investments to Boost Financial Inclusion
New Delhi, March 25: The Securities and Exchange Board of India (SEBI) has proposed the introduction of gift cards or gift prepaid payment instruments (PPIs) for investing in mutual funds, aiming to widen investor participation and enhance financial inclusion.Gift PPIs to Enable Gifting of Mutual Fund Investments
According to SEBI’s consultation paper released on Tuesday, individuals will be able to purchase Gift PPIs and transfer them to recipients, who can then use these instruments to subscribe to mutual fund units. The move is designed to simplify onboarding of new investors into the mutual fund ecosystem.Funding, Validity, and Investment Cap Defined
SEBI has outlined specific operational guidelines for these instruments. Gift PPIs can only be funded through electronic bank transfers or Unified Payments Interface (UPI) from Indian bank accounts. Each instrument will carry a validity of one year from the date of issuance.To regulate usage, the market regulator has proposed a cap of ₹50,000 per investor per financial year for investments made through gift PPIs.
Monitoring Mechanism and Transaction Controls
Registrar and Transfer Agents (RTAs), acting on behalf of Asset Management Companies (AMCs), will monitor investments made via Gift PPIs, e-wallets, and cash. If an investor exceeds the ₹50,000 limit through Gift PPI redemption, the transaction will be rejected. In such cases, the amount will be refunded to the issuer’s escrow account.Proposal Origin and Industry Context
The consultation paper follows a proposal submitted by the Association of Mutual Funds in India (AMFI), which recommended allowing Gift PPIs as a mode of investment in mutual fund units.SEBI noted that prepaid instruments and gift cards have traditionally been used in retail transactions, with their adoption rising alongside the growth of digital payments, offering convenience, instant delivery, and improved security.
Public Feedback Invited Until April 14
SEBI has invited public comments on the proposal, with the feedback window open until April 14. The regulator stated that the introduction of Gift PPIs is expected to support broader participation in mutual fund investments and strengthen financial inclusion.Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
The information provided is for general informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any securities. Readers are advised to rely on their own assessment and judgment and consult appropriate financial advisers, if required, before taking any investment-related decisions.