Sebi introduces new incentive structure for MF distributors

Markets regulator Sebi on Thursday introduced a new incentive structure for mutual fund distributors, whereby they will receive additional commission for bringing in new individual investors from B-30 cities and new women investors from any city.

The new incentive structure, aimed at promoting wider outreach and awareness, will become effective from February 1, 2026, Sebi said in its circular. Under this, asset management companies (AMCs) will pay these distributors 1 per cent of the first lump-sum investment or the first-year SIP amount, up to Rs 2,000, provided the investor stays invested for at least a year. This commission will come from the 2 basis points AMCs already set aside for investor education and will be paid over and above existing trail commissions.

However, no dual incentives will be allowed for the same woman investor from B-30 cities. The additional commission will not apply to ETFs, certain Fund of Funds, and very short-duration schemes like overnight, liquid, ultra-short, and low-duration funds. “The mutual fund distributors shall be eligible for additional commission (for bringing) -- new individual investors (new PAN) from B-30 cities, at the mutual fund industry level; and New women individual investors (new PAN) from both Top 30 and B-30 cities,” Sebi said.