Capital market regulator SEBI has reintroduced incentives for distributors who bring new investors in the industry from beyond top-30 cities.
In a move to enhance mutual fund reach, SEBI on Friday said it has been decided to revise the incentive structure and provide incentive to distributors only for investment/inflows from new individual investors (new PAN) from B-30 cities.
The incentive will be provided to the distributor for new investor at the industry level and such incentive will be capped at 1 per cent of the first application amount (in case of lumpsum investment) or total investment during the first year (in case of SIP) subject to a maximum of ₹2,000, it said.
Considering the scope of gender inclusion in the MF space, SEBI has decided to incentivise distributors to create awareness and promote financial inclusion among women investors.
An additional commission will be paid to distributors for investment/inflows from new women individual investors (new PAN) at the industry level. The computation and payment of such commission will be on the same lines as for B-30 incentive, it said.
Sunil Subramaniam, CEO of independent think-tank Sense and Simplicity said the Sebi move is marginally positive for distributors as they have to find a new investors for MF and wait for one year to earn the additional commission of ₹2,000.
In 2023, SEBI suspended B30 incentives due to irregularities in how mutual fund companies were implementing the incentive. Without a proper system-driven checks, the regulator found transactions were split and portfolio churned to earn higher incentives.
Following this, the regulator directed MF to suspend B30 incentives while Sebi revamped it to create a better, more inclusive structure with effective controls against misuse.
SEBI has reduced the exit load on MF schemes to 3 per cent from 5 per cent in line with the current industry practice. The present MF regulatory framework allows schemes to charge a maximum exit load of 5 per cent, which gets credited back to the scheme. However, MF charges exit loads between 1 per cent and 2 per cent. Hence, setting the maximum cap at 3 per cent was found appropriate to strike a better balance between investor protection and flexibility for schemes having exposure to less liquid securities, it said.