The Securities and Exchange Board of India (SEBI) has announced a new incentive system for mutual fund distributors.
Under this system, distributors will earn extra commissions for bringing in new individual investors from B-30 cities and new women investors from any city.
B-30 cities include the top 30 cities along with mid-sized and smaller cities.
SEBI stated in its circular that this new incentive structure will take effect from February 1, 2026. The aim is to expand the reach of mutual funds and increase investor awareness.
Under the new rules, asset management companies (AMCs) will pay distributors a percentage of the first lump sum investment or the first year’s SIP amount, up to a maximum of ₹2,000, as long as the investor stays invested for at least one year.
This extra commission will come from the funds that AMCs have already set aside for investor education and information.
It will be paid in addition to the regular commission distributors already receive.
However, no distributor will be allowed to claim a double incentive for the same woman investor in B-30 cities.
Also, the additional commission will not apply to ETFs, certain fund of funds, or very short-term schemes like overnight, liquid, ultra-short, and low-duration funds.
Eligibility Rules and Implementation Guidelines
SEBI clarified that distributors will qualify for this incentive if they bring in new individual investors from B-30 cities.
They will also earn extra commissions for attracting new women investors from both top 30 and B-30 cities.
The mutual fund industry body, AMFI, will issue detailed implementation guidelines within 30 days.
SEBI also mentioned that any changes made to scheme documents because of this new incentive system will not be treated as fundamental changes.
Why SEBI Made These Changes
Earlier, SEBI had introduced a similar incentive framework for distributors who brought in new investments from B-30 cities.
However, after receiving industry feedback and noticing possible misuse of the system, SEBI decided to revise and improve the incentive structure.
