Sebi revises distributor incentives to boost new investors from smaller cities and women investors
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The Securities and Exchange Board of India (Sebi) has introduced a new incentive structure for mutual fund distributors to encourage more first-time investors to enter the market, according to a circular issued on November 27, 2025. The circular said the move is aimed at improving outreach, especially in smaller cities and among women investors.
Sebi noted that the earlier rule, which allowed incentives for investments from outside the top 30 cities, had been removed due to concerns of misuse. The circular said the change followed industry feedback.
Under the new framework, distributors will receive additional commission for onboarding new individual investors with fresh PANs from B-30 cities. They will also be eligible for incentives when they bring in new women investors from both the top 30 cities and B-30 cities, the circular added.
The new rules will take effect from February 1, 2026, according to the circular.
The circular said the commission structure will offer 1% of the first lump-sum investment, capped at ₹2,000, if the investor stays invested for at least one year. For SIPs, distributors will get 1% of the total amount invested in the first year, again capped at ₹2,000, according to the circular. Sebi also said that the money for these incentives will come from the 2 basis points AMCs already earmark each year for investor education and awareness.
November 2025
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The regulator clarified in the circular that this extra commission will be paid over and above the existing trail commission. However, dual incentives will not be allowed. For instance, a distributor cannot claim both the B-30 incentive and the women investor incentive for the same investment.
Some categories of schemes will not qualify for the additional commissions. These include ETFs, domestic fund-of-funds that invest over 80% in local funds, and schemes with a duration of less than one year, such as overnight, liquid, ultra-short duration and low duration funds, per the circular.
The circular also said the Association of Mutual Funds in India (AMFI) will work with Sebi to release detailed implementation standards within 30 days. Sebi also noted that changes to offer documents because of this revised incentive structure will not count as a fundamental attribute change.