Sebi eyes gift cards for mutual fund investments

Sebi has suggested a maximum investment limit of Rs 50,000 per investor per financial year through gift PPIs. If a transaction exceeds this limit, the registrar and transfer agent (RTA) would reject it, and the PPI’s value would be returned to the issuer’s escrow account

Metro India News | new delhi

Markets regulator Sebi is considering allowing gift cards and prepaid payment instruments (PPIs) to invest in mutual funds, aiming to bring more new investors into the market and promote financial inclusion.

Under the proposal, an individual can purchase a gift PPI and give it to a recipient, who can then use it to buy mutual fund units. The PPIs would be funded only via electronic bank transfer or UPI from an Indian bank account and would remain valid for one year from the date of issuance.

Sebi has suggested a maximum investment limit of Rs 50,000 per investor per financial year through gift PPIs. If a transaction exceeds this limit, the registrar and transfer agent (RTA) would reject it, and the PPI’s value would be returned to the issuer’s escrow account. The RTAs, on behalf of asset management companies (AMCs), would track investments made through gift PPIs, e-wallets, or cash.

Traditionally used for retail purchases, gift cards and prepaid solutions have grown in popularity due to digital payments, offering speed and enhanced security. The move follows a proposal from the Association of Mutual Funds in India (AMFI) to allow gift PPIs for mutual fund subscriptions.

Sebi believes the initiative could attract first-time investors to the mutual fund ecosystem. Public feedback on the proposal is open until April 14.