SEBI introduces new incentive structure for mutual fund 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  ₹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.

Mutual fund industry body AMFI will release implementation guidelines within 30 days, and changes made in scheme documents due to this new structure will not count as fundamental changes.

Earlier, SEBI had provided a framework for incentivising distributors for new investment/ inflows from beyond the top 30 cities (B-30 cities).

However, due to concerns of misuse of this framework, based on the feedback received from the industry, the regulator has decided to revise the incentive structure for distributors for bringing in new investment in the mutual funds.