SEBI defers rollout of distributor incentive framework to March 1 amid industry implementation concerns

Under the new construct, SEBI has proposed that asset management companies fund the additional incentive capped at 1% of the lump-sum amount or total SIP contributions in the first year, up to Rs 2,000 per eligible new investor from the existing 2 basis points earmarked annually for investor education and financial inclusion, with incentives payable over and above regular trail commissions.

• SEBI extends new mutual fund distributor incentive rollout to March 1, 2026
• Incentives target new investors from smaller cities and women across all cities
• Extension allows more time for operational readiness and system setup

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The Securities and Exchange Board of India (SEBI) has extended the implementation timeline for its additional incentive structure aimed at encouraging mutual fund distributors to onboard new individual investors from smaller cities and women investors.

In a circular, SEBI said the revised framework (originally scheduled to come into effect from February 1, 2026) will now be implemented from March 1, 2026. The incentive structure, first announced through a circular dated November 27, 2025, is designed to boost mutual fund penetration by rewarding distributors for mobilising investments from two key categories: New individual investors (new PAN) from B-30 cities, and New women individual investors (new PAN) from both T-30 and B-30 cities.

According to SEBI, the decision to defer the rollout was taken after feedback from industry participants, who highlighted operational challenges in setting up the required systems and processes for smooth implementation within the original timeline. All other provisions of the circular dated November 27, 2025 shall remain unchanged.

Also read: Mutual fund industry welcomes B-30 incentive revival but expects limited flow benefit

The move is expected to provide mutual funds, asset management companies, trustee entities, and registrars and transfer agents additional time to align their operational frameworks with the new incentive mechanism.

Moneycontrol had previously reported that the revised incentive framework was designed to succeed an older B-30 incentive model that SEBI had scrapped amid concerns over inconsistent application and potential misuse. Instead of being tied to geographic inflows alone, the new model focuses on new PAN registrations at the mutual fund industry level, to ensure that rewards are genuinely linked to onboarding first-time investors rather than existing customers switching funds.

Industry voices at the time pointed to this shift as both an opportunity and a challenge. One mutual fund executive, speaking to Moneycontrol, said the focus on genuine first-time investors “could help deepen financial inclusion and bring untapped segments into the market,” but stressed that “accurate tracking and reconciliation of new PANs across platforms will be critical for distributors and AMCs alike.”

Under the new construct, SEBI has proposed that asset management companies fund the additional incentive capped at 1% of the lump-sum amount or total SIP contributions in the first year, up to Rs 2,000 per eligible new investor from the existing 2 basis points earmarked annually for investor education and financial inclusion, with incentives payable over and above regular trail commissions.