SEBI has released a consultation paper proposing the introduction of Gift Prepaid Payment Instruments (Gift PPIs) for investment in mutual funds, a move that could reshape how retail participation is driven in the industry.
The proposal aims to leverage India’s strong gifting culture to make mutual fund investing more accessible, especially for first-time investors.
A purchaser of Gift PPI can gift the prepaid payment instrument, to a recipient of the Gift PPI, who can utilize the instrument for subscription of units of mutual fund.
𝗞𝗲𝘆 𝗵𝗶𝗴𝗵𝗹𝗶𝗴𝗵𝘁𝘀:
(i) Introduction of gift cards for mutual fund investments, purchasable via banking channels/UPI;
(ii) Recipient can redeem the gift to invest in schemes offered by the respective AMC;
(iii) Maximum value capped at ₹10,000 per Gift PPI (as per RBI framework);
(iv)No cash withdrawal / non-reloadable instrument;
(v) Mandatory ownership verification to comply with “no third-party payment” norms;
(vi) Annual investment cap of ₹50,000 per investor per AMC (including wallet/cash routes);
(vii) Full utilisation required, no partial redemption permitted;
(viii) Validity: 1 year, post which unused funds are refunded to purchaser;
(ix) No incentives (cashbacks, rewards) allowed to avoid mis-selling;
SEBI has also proposed operational safeguards around third-party validation, audit trails (bank/UPI funding only), and investor protection mechanisms.
The framework draws a clear regulatory boundary :- RBI governs the PPI instrument, while SEBI regulates the mutual fund transaction layer.
Public comments are invited until April 14, 2026. Copy of the Consultation Paper is available here: https://lnkd.in/g8SZS-ar
