Additional incentives to distributors for onboarding new individual investors from B-30 cities and women investors

**Executive Summary** This circular, issued by the Securities and Exchange Board of India (SEBI) on November 27, 2025, outlines additional incentives for mutual fund distributors to onboard new individual investors from B-30 cities and women investors. It details the revised incentive structure following the deletion of Regulation 52(6A)(b) and takes effect on February 01, 2026. AMFI, in consultation with SEBI, is required to issue implementation standards within 30 calendar days from the date of this circular. **Key Points / Main Content** * **Regulation Change:** Regulation 52(6A)(b) of the SEBI (Mutual Funds) Regulations 1996, which provided a framework for incentivizing distributors for new investment/inflows from beyond top 30 cities (B-30 cities), has been deleted. * **Eligibility for Additional Commission:** Mutual fund distributors are eligible for additional commission to expand outreach and create awareness among new investors, in terms of Regulation 52(4A). * New individual investors (new PAN) from B-30 cities. * New women individual investors (new PAN) from both Top 30 and B-30 cities. * **Incentive Structure:** AMCs shall pay additional commission to distributors for onboarding eligible new investors, subject to certain conditions. * **Lump Sum Investment:** 1% of the amount of the first application subject to a maximum of ₹2,000, if the investor remains invested for a minimum period of one year. * **Systematic Investment Plan (SIP):** 1% of the total investment made during the first year, subject to a maximum of ₹2,000. * The additional commission is paid from the 2 basis points on daily net assets, mandated to be set apart annually by AMCs for investor education, awareness and financial inclusion initiatives, subject to adequate claw back provisions. * The additional commission is in addition to the existing trail commission paid to the distributor from the scheme. * Distributors are eligible to receive the additional commission for mobilizing investments from new women investors from Top-30 cities and in cases where the commission for new investment from B-30 cities has not been claimed for the same woman investor/investment. Dual incentives for the same investor/investment are not permitted. * **Ineligible Schemes:** Additional distribution commission is not applicable for: * Exchange Traded Funds (ETFs) * Fund of Funds (domestic) with more than 80% of Assets Under Management (AUM) invested in domestic funds * Schemes having duration requirements of less than one year (Overnight Fund, Liquid Fund, Ultra Short Duration Fund, and Low Duration Fund) * **Implementation:** AMFI, in consultation with SEBI, shall issue necessary implementation standards within 30 calendar days of the circular date. * **Offer Document Changes:** Any changes to the offer document, pursuant to the revised incentive structure, shall not be considered as a Fundamental Attribute Change. * **Effective Date:** The provisions of this circular come into effect on February 01, 2026. **Impact Analysis** **Mutual Funds / Asset Management Companies (AMCs)** * **Impact:** AMCs are required to pay additional commission to distributors as per the outlined incentive structure for onboarding new eligible investors. They need to set aside 2 basis points on daily net assets annually for investor education, awareness, and financial inclusion initiatives. * **Action Required:** Implement the new incentive structure and ensure compliance with the provisions of the circular. Set aside the required funds for investor education. **Mutual Fund Distributors** * **Impact:** Distributors have the opportunity to earn additional commission by onboarding new individual investors from B-30 cities and women investors from all cities. * **Action Required:** Familiarize themselves with the new incentive structure and target eligible investor segments. **Association of Mutual Funds in India (AMFI)** * **Impact:** AMFI needs to ensure uniform implementation of the new rules. * **Action Required:** Issue necessary implementation standards in consultation with SEBI, within 30 calendar days from the date of the circular. **Investors** * **Impact:** Indirectly benefits from increased awareness and outreach, potentially leading to greater participation in mutual funds, particularly from B-30 cities and women. * **Action Required:** No direct action required.

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