Sebi’s new proposal enables mutual fund gifting through PPIs Mutual fund investments can soon be gifted using prepaid payment instruments (PPIs), as the Securities and Exchange Board of India (Sebi) has proposed a framework allowing individuals to purchase gift PPIs capped at ₹10,000. These instruments, valid for one year, can be used to transfer funds for mutual fund subscriptions. The initiative aims to attract new investors and improve access to financial products. Under the proposed framework, individuals can acquire gift PPIs either digitally or in physical form through banking channels and transfer them to recipients. Once claimed, the recipient can redeem the instrument to invest in mutual fund schemes via an asset management company (AMC) platform. The move is designed to simplify the investment process for first-time investors and expand the reach of financial products. The issuance and operation of PPIs will continue to be regulated by the Reserve Bank of India (RBI), while mutual fund transactions will fall under Sebi’s oversight. Gift PPIs will be non-reloadable and valid for one year, according to a consultation paper released by Sebi. The regulator has outlined several safeguards, including mandatory third-party validation checks to confirm ownership, compliance with "no third-party payment" norms, and an investment cap of ₹50,000 per investor per mutual fund per financial year across PPIs, e-wallets, and cash. To prevent idle balances, the entire value of the gift PPI must be invested. If the instrument remains unclaimed after one year, the amount will be refunded to the purchaser’s bank account. Sebi emphasized that these measures aim to ensure transparency and protect investors while promoting the use of PPIs as a tool for financial inclusion.#reserve_bank_of_india #sebi #prepaid_payment_instruments #mutual_fund #asset_management_company
