Investing in mutual funds may soon become easier and more exciting. Securities and Exchange Board of India (SEBI) is planning a new system that will allow people to gift mutual fund investments instead of giving cash or physical gifts.
In simple terms, just like a gift card, you will be able to give a special “gift card” that the receiver can use to invest in mutual funds. This idea could help more people, especially beginners, start investing in the market.
How Gift PPI Will Work
As per SEBI’s proposal, a person can buy a Gift PPI (prepaid payment instrument) and give it to someone else. The receiver can then use this to buy mutual fund units.
These Gift PPIs can only be loaded using an Indian bank account through online transfer or UPI. They will remain valid for one year from the date of issue.
SEBI has also suggested a maximum investment limit of ₹50,000 per investor in one financial year through these Gift PPIs.
How the Investment Limit Will Be Tracked
According to SEBI, registrars and transfer agents (RTAs) will monitor how much an investor has invested in a year using Gift PPIs, e-wallets, or cash.
This tracking will be done by asset management companies (AMCs) to ensure the investment limit is not crossed.
What Happens If You Cross ₹50,000 Limit
If someone tries to invest more than ₹50,000 using a Gift PPI, the transaction will be rejected immediately.
In such cases, the money will be sent back to the escrow account of the person who originally gifted the amount.
Current Use of Gift Cards
Right now, gift cards and prepaid instruments are mainly used for shopping and retail purchases.
However, with the growth of digital payments, their usage has increased quickly because they are simple, fast, and secure.
Why This Proposal Was Introduced
This idea came after the Association of Mutual Funds in India (AMFI) suggested to SEBI that Gift PPIs should also be allowed for mutual fund investments.
This means people will now be able to gift investments, not just money or items.
Benefits for New Investors
SEBI believes this system will encourage more people to invest in mutual funds. It can make it easier for beginners to enter the market and improve financial inclusion.
SEBI has also asked for public feedback on this proposal. People can share their views until April 14, after which the final rules will be decided.
