MF outreach push: Sebi extends deadline for distributor incentives; rollout now from March 1

Markets regulator Sebi has extended the timeline for implementing an additional incentive structure for mutual fund distributors to March 1, allowing more time for asset management companies to put systems in place, according to a circular issued on Wednesday.The revised framework, aimed at encouraging onboarding of new individual investors from B-30 cities and new women investors across all cities, was earlier scheduled to come into effect from February 1, 2026. B-30 cities refer to locations beyond the top 30 cities under the mutual fund industry’s classification, PTI reported.Sebi said the decision to defer implementation followed feedback from the industry, which flagged operational challenges in ensuring a smooth rollout of the new incentive mechanism.Under the revised framework, distributors will be eligible for an additional commission of 1 per cent on the first lump-sum investment or the first-year systematic investment plan (SIP) amount, capped at Rs 2,000, provided the investor remains invested for at least one year. This incentive will be paid over and above existing trail commissions and will be funded from the 2 basis points already earmarked by AMCs for investor education.However, the regulator has specified that no dual incentives will be allowed for the same woman investor from B-30 cities. The additional commission will also not apply to exchange-traded funds (ETFs), certain fund-of-funds schemes, and very short-duration products such as 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.Earlier, Sebi had put in place a framework to incentivise distributors for mobilising investments from beyond the top 30 cities. However, citing concerns over possible misuse and based on industry feedback, the regulator decided to revise the incentive structure to better align it with the objective of expanding the investor base while ensuring safeguards.