CIRCULAR
HO/(83)2025-IMD-POD-1/I/152/2025 November 27, 2025
To
All Mutual Funds
All Asset Management Companies (AMCs)
All Trustee Companies of Mutual Funds
Registrar to an Issue and Share Transfer Agents (‘RTAs’)
Association of Mutual Funds in India (AMFI)
Madam/ Sir,
Subject: Additional incentives to distributors for onboarding new individual
investors from B-30 cities and women investors
1. Regulation 52(6A)(b) of the SEBI (Mutual Funds) Regulations 1996 provided a
framework for incentivizing distributors for new investment/ inflows from beyond
top 30 cities (B-30 cities).
2. Due to concerns of misuse of this framework, based on the feedback received from
the industry, it has been decided to revise the incentive structure for distributors
for bringing in new investment/ inflows in the Mutual Funds. Therefore vide gazette
notification dated October 31, 2025, the Regulation 52(6A)(b) of the SEBI (Mutual
Funds) Regulations 1996 has been deleted.
3. However, in order to encourage mutual fund distributors to expand their outreach
and create awareness among new investors, in terms of Regulation 52(4A) of SEBI
(Mutual Funds) Regulations, 1996 the mutual fund distributors shall be eligible for
additional commission in the following manner -
3.1. New investments / inflows eligible for the additional commission –
3.1.1. New individual investors (new PAN) from B-30 cities, at the mutual
fund industry level;
3.1.2. New women individual investors (new PAN) from both Top 30 and
B-30 cities.
3.2. Incentive Structure:
3.2.1. AMCs shall pay additional commission to distributors for onboarding
eligible new investors, subject to the conditions specified in para 3.1
above.
3.2.2. The structure of such additional commission shall be as under:
Investment Mode Commission Structure
Lump Sum Investment 1% of the amount of the first application subject
to a maximum of ₹2,000, provided the investor
remains invested for a minimum period of one
year
Systematic Investment 1% of the total investment made during the first
Plan (SIP) year, subject to a maximum of ₹2,000.
3.2.3. The additional distribution commission shall be paid from the 2 basis
points on daily net assets, mandated to be set apart annually by
AMCs for investor education, awareness and financial inclusion
initiatives, subject to adequate claw back provisions.
3.2.4. The additional commission specified at para 3.2.2 shall be in addition
to the existing trail commission paid to the distributor from the
scheme.
3.2.5. Distributors shall be eligible to receive the additional commission for
mobilizing investments from new women investors from Top-30 cities
and in cases where the commission for new investment from B-30
cities has not been claimed for the same woman investor/
investment. Dual incentives for the same investor/investment shall
not be permitted.
3.3. Investment in scheme not eligible for additional commission:
Payment of additional distribution commission in the manner specified in
para 3.2 above, shall be mandatory for all schemes of a mutual fund, except
the following:
3.3.1. Exchange Traded Funds (ETFs);
3.3.2. Fund of Funds (domestic) with more than 80% of Assets Under
Management (AUM) invested in domestic funds;
3.3.3. Schemes having duration requirement of less than one year:
a) Overnight Fund;
b) Liquid Fund;
c) Ultra Short Duration Fund; and
d) Low Duration Fund.
4. In order to ensure uniform implementation, AMFI in consultation with SEBI, shall
issue the necessary implementation standards within 30 calendar days from the
date of this circular.
5. Further, any change in the offer document, pursuant to the revised incentive
structure shall not be considered as a Fundamental Attribute Change.
6. The provisions of this circular shall come into effect from February 01, 2026.
7. This circular is issued under the provisions of Regulation 52(4A) read with 77 of
SEBI (Mutual Funds) Regulations, 1996, in the interest of investors and to promote
the orderly development of the mutual fund industry.
8. This circular is available at www.sebi.gov.in under the link “Legal-> Circulars.”
Yours faithfully,
Peter Mardi
Deputy General Manager
Investment Management Department
+91-22-26449233
peterm@sebi.gov.in