Sebi pushes deadline to March 1 for implementing additional incentive structure for mutual fund distributors

Market regulator Sebi on Wednesday has extended the timeline for implementing additional incentive structure for mutual fund distributors to March 1. This additional incentive structure is for onboarding new individual investors from B-30 cities and new women investors (new PAN) from both T-30 and B-30 cities.

Earlier this incentive structure was scheduled to be effective from February 1, 2026.

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Based on the feedback received from the industry, citing operational difficulties in putting in place the requisite systems and processes for smooth implementation of the additional incentive structure, it has been decided to extend the implementation timeline, the market regulator said in a circular.

Accordingly, the provisions of the aforesaid circular shall now come into effect from March 01, 2026, the circular further said. All other provisions of SEBI Circular dated November 27, 2025 shall remain unchanged

Sebi in its September board meeting announced that it has been decided that the incentive will be provided to the distributor for new investor at the industry level and such incentive shall be capped at 1% of the first application amount (in case of lumpsum investment) or total investment during the first year (in case of SIP) subject to a maximum of Rs 2,000.

Considering the scope of gender inclusion in the Mutual Fund space, it was decided to incentivize distributors to create awareness and promote financial inclusion among women investors. Additional commission shall be paid to distributors for investment/inflows from new women individual investors (new PAN) at the industry level. The computation and payment of such commission shall be on the same lines as for B-30 incentive.

In November 2025, Sebi said that the additional distribution commission shall be 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.

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Distributors shall be 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 shall not be permitted.

Investment in these schemes are not eligible for additional commission - Exchange Traded Funds (ETFs), Fund of Funds (domestic) with more than 80% of Assets Under Management (AUM) invested in domestic funds, and schemes having duration requirement of less than one year - overnight fund, liquid fund, ultra short duration fund, and low duration fund.