SEBI’s B-30 and women investor incentive framework comes into effect

The framework provides for additional incentives to mutual fund distributors for mobilising fresh investments from new individual investors identified by new PANs at the industry level, specifically from B-30 cities and women investors.

• SEBI's new B-30 city distributor incentive starts March 2026
• Distributors get 1 percent extra commission, capped at Rs 2,000
• Incentives target new investors, women, and B-30 city residents

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The distributor incentive framework aimed at boosting mutual fund penetration in B-30 cities and among women investors has come into force from March 1, 2026, after a one-month deferment by the Securities and Exchange Board of India (SEBI) to address industry implementation concerns.

The framework provides for additional incentives to mutual fund distributors for mobilising fresh investments from new individual investors identified by new PANs at the industry level, specifically from B-30 cities and women investors.

Under the structure, distributors are eligible for an additional commission of 1 percent on the first lump-sum investment from an eligible investor, capped at Rs 2,000, provided the investor remains invested for at least one year. For systematic investment plans (SIPs), the incentive is 1 percent of total investments made during the first year, again capped at Rs 2,000. The additional commission is payable over and above trail commissions and will be granted only once per PAN, with no dual incentives allowed for the same investor or investment. The payout will be funded from the portion of daily net assets that asset management companies are mandated to set aside annually for investor education, awareness and financial inclusion initiatives, and will be subject to clawback provisions.

The additional commission “shall be payable over and above the trail commission due to the MFD” and shall be granted only once per PAN, and no dual incentives shall be allowed in respect of the same investor or the same investment.

The incentive will be mandatory across all mutual fund schemes, except for certain categories. These exclusions include Exchange Traded Funds (ETFs); domestic Fund of Funds with more than 80 percent of their assets under management invested in domestic funds; and schemes with a duration requirement of less than one year, namely Overnight Funds, Liquid Funds, Ultra Short Duration Funds and Low Duration Funds.

When SEBI first announced the revival of the B-30 incentive framework in September 2025, the mutual fund industry had largely welcomed the move but flagged that the revised structure, particularly the Rs 2,000 cap per investor, could limit the overall flow impact compared to the earlier uncapped model that was discontinued in 2023. Industry participants had noted that while the renewed focus on genuine first-time investors could strengthen inclusion efforts, B-30 inflows had already been showing structural improvement even without incremental incentives.

The B-30 programme first introduced in 2012, was designed to deepen mutual fund penetration in smaller towns by paying distributors an extra commission on inflows from these locations. Under the earlier framework, incentives were calculated as a percentage of total collections and had no monetary ceiling, allowing high-ticket investments to generate large commissions. SEBI discontinued the scheme in February 2023 after finding instances of application splitting and churning, even as B-30 assets had climbed around 17%  of the mutual fund industry’s total assets.