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
India Markets Regulator Proposes Gift Cards for Mutual Fund Investments India's securities regulator, the Securities and Exchange Board of India (SEBI), has proposed allowing gift cards or prepaid payment instruments (PPIs) for mutual fund investments as part of efforts to enhance financial inclusion and attract new investors. The proposal, outlined in a consultation paper published on its website, aims to simplify the investment process by enabling individuals to use gift cards or PPIs to purchase mutual fund units. Under the proposed framework, PPIs would be funded exclusively through electronic bank transfers or Unified Payments Interface (UPI) transactions from an Indian bank account. Each PPI would have a validity period of one year from the date of issuance, ensuring that the funds are used within a specified timeframe. The regulator emphasized that this measure is designed to make mutual fund investments more accessible, particularly for first-time investors who may prefer alternative methods of funding their investments. To ensure compliance with investment limits, registrars and transfer agents, acting on behalf of asset management companies, would track annual investments made through gift PPIs, e-wallets, and cash. Any transaction linked to a gift PPI that would cause an individual's total annual investment to exceed 50,000 rupees (approximately $535.38) would be rejected. This cap is intended to prevent excessive concentration of investments in a single instrument while promoting broader participation in the mutual fund market. The proposal also includes a note on the exchange rate, stating that $1 is equivalent to 93.3910 Indian rupees.#india #securities_and_exchange_board_of_india #mutual_fund #prepaid_payment_instruments #unified_payments_interface
