SEBI Proposes Mutual Fund Gifting via PPI’s: All You Need to Know

The Securities and Exchange Board of India (SEBI) has introduced a proposal to allow prepaid gift cards and digital wallets, collectively known as Prepaid Payment Instruments (PPIs), to be used for investing in mutual funds. The move is outlined in a consultation paper that is open for public feedback until April 14.

Key Features of the Proposal

SEBI’s framework aims to merge the concepts of gifting and investing while ensuring regulatory safeguards remain intact. The proposal includes several key conditions:

• Investment cap: Individuals can invest up to ₹50,000 per financial year through gift-based PPIs or digital wallets.
• Verified funding sources: All transactions must originate from verified Indian bank accounts via UPI or electronic transfer channels.
• No promotional incentives: Wallet providers and issuers will be prohibited from offering cashbacks, discounts, or similar incentives tied to mutual fund investments.
• Refund mechanism: If a gifted investment is not redeemed within one year, the funds will automatically be returned to the sender’s bank account.
• Monitoring and compliance: Registrars and transfer agents (RTAs) will oversee transactions to ensure compliance with the prescribed norms.

Corporate Gifting as a Growth Lever

Industry experts believe corporate gifting could play a significant role in driving adoption. India’s corporate rewards and loyalty market, currently valued at around $35–40 billion, is expected to grow to $65 billion by 2030.

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Under the proposed framework, companies could offer mutual fund units as part of employee rewards or partner incentive programs—potentially unlocking a new channel for retail participation in capital markets. If implemented, the proposal could establish a structured bridge between digital gifting and investment products, making mutual funds more accessible to a broader audience. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Mutual fund investments in the securities market are subject to market risks, read all the related documents carefully before investing.