SEBI Proposes Payroll-Linked Mutual Fund SIPs and Unit Donations

The Securities and Exchange Board of India (SEBI) has proposed a draft framework to allow certain third-party payment structures in mutual funds, expanding beyond the current system where investments must originate only from an investor’s bank account. 

As per the news reports, the proposals, released through a consultation paper on Wednesday, cover salary-linked SIPs, commission payments to distributors through mutual fund units and donation facilities linked to mutual fund investments.  

SEBI said the framework would continue to operate under anti-money laundering and KYC norms. 

Salary Deduction Route for SIPs 

Under the proposal, employers may be allowed to facilitate mutual fund investments through salary deductions, similar to structures used for provident fund and pension contributions. 

The facility would be limited to listed companies, EPFO-registered entities, and Asset Management Companies (AMCs). Employees would have to opt in voluntarily, while the investments would remain in the employee’s own name. 

SEBI said the proposal is aimed at providing operational ease for employees who already use payroll-based savings products.  

The regulator has also sought public comments on whether employers should be restricted from promoting schemes managed by affiliated AMCs. 

Distributor Commissions in MF Units 

The consultation paper has also proposed allowing AMCs to pay trail commissions, partly or fully, in the form of mutual fund units to AMFI-registered Mutual Fund Distributors (MFDs). 

According to SEBI, the units would be credited directly to the distributor as the beneficiary. The regulator said the structure could support long-term savings among distributors and create a more systematic investment route. 

At the same time, SEBI has asked for feedback on possible conflict-of-interest risks, including whether distributors may favour schemes linked to higher unit-based payouts. 

Donation Facility Through Mutual Funds 

SEBI has also proposed allowing investors to contribute towards social causes through mutual fund structures.  

The proposal includes donations to Social Stock Exchange-listed non-profits through Zero Coupon Zero Principal instruments or direct contributions to specified NGOs. 

The regulator has invited public comments on the proposals till June 10, 2026. 

Read More: Markets Predict 1 US Dollar Will Soon Cost Over ₹100! 

Conclusion  

The consultation paper introduces changes across mutual fund payment structures while retaining KYC and anti-money laundering requirements. SEBI will take public feedback on the proposals till June 10, 2026. 

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