SEBI has given major relief to mutual fund distributors by extending the implementation date of its new additional incentive structure.
The market regulator has postponed the rollout by one month. The new system will now come into effect from March 1, 2026, instead of the earlier date of February 1, 2026.
This decision will benefit mutual fund distributors who focus on bringing mutual fund investments to small towns and new investors.
Who Will Get the Benefit of the New Incentive?
The new incentive structure mainly targets two types of new investors:
New individual investors from B-30 cities
New women investors
In the mutual fund industry, B-30 cities refer to areas outside India’s top 30 major cities. Mutual fund penetration in these regions is still low, which is why SEBI wants to encourage investments there.
Why Did SEBI Extend the Deadline?
SEBI received continuous feedback from the industry about difficulties in setting up the technical systems and processes needed to implement the new incentive structure.
Many asset management companies (AMCs) and distributors said it would be hard to implement the system smoothly within the original timeline.
Considering these operational challenges, SEBI decided to give the industry more time. As a result, the new implementation date is March 1, 2026.
How Much Incentive Will Distributors Receive?
Under the new framework, if a mutual fund distributor brings in a new investor, the AMC will pay an additional commission.
The incentive will be 1% of:
the first lump sum investment, or
the total SIP amount invested in the first year
The maximum incentive is capped at ₹2,000
The investor must stay invested for at least one year
Source of the Additional Commission
This extra commission will be paid from the funds already set aside by AMCs for investor awareness programs. The money will come from 2 basis points and will be paid over and above the existing trail commission.
This means distributors’ current earnings will not be affected. Instead, they will receive additional income.
Schemes Not Eligible for the Incentive
SEBI has clarified that the additional incentive will not apply to all schemes. The following are excluded:
Exchange Traded Funds (ETFs)
Certain Fund of Funds
Very short-term schemes such as:
Overnight funds
Liquid funds
Ultra-short duration funds
Low-duration funds
Also, if a female investor is from a B-30 city, the distributor will not receive a double incentive. Only one additional commission will be paid for the same investor.
SEBI’s Official Statement
Earlier, SEBI had stated that mutual fund distributors would receive additional commission for bringing new individual investors.
This includes new investors from B-30 cities and new women investors from both top 30 and B-30 cities.
Incentive Structure Was Modified Earlier Too
This is not the first time SEBI has revised the incentive framework. Earlier, a system was introduced to promote investments from B-30 cities, but the industry raised concerns about possible misuse.
Taking these concerns into account, SEBI has now designed a cleaner and more transparent incentive system to ensure that genuine new investors enter the mutual fund market and misuse is avoided.
