SEBI Imposes B-30 Framework, Launches Incentives for Women Investors

SEBI's Distributor Incentive Framework for Mutual Funds Takes Effect

March 1, 2026, marks the implementation of the revised distributor incentive framework, aimed at boosting mutual fund penetration in B-30 cities and among women investors. The Securities and Exchange Board of India (SEBI) had initially deferred its enforcement by a month to address industry implementation concerns.

Framework Overview

The framework provides additional incentives to mutual fund distributors for mobilizing fresh investments from new individual investors, specifically from B-30 cities and women investors. Distributors are eligible for an additional commission of 1% on the first lump-sum investment from an eligible investor, capped at Rs 2,000, provided the investor remains invested for at least one year. For systematic investment plans (SIPs), the incentive is 1% of total investments made during the first year, again capped at Rs 2,000.

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Key Provisions

• The additional commission is payable over and above trail commissions and will be granted only once per PAN, with no dual incentives allowed for the same investor or investment.
• The payout will be funded from the portion of daily net assets that asset management companies are mandated to set aside annually for investor education, awareness, and financial inclusion initiatives.
• The incentive will be subject to clawback provisions.

Exclusions

• The incentive framework will not apply to Exchange Traded Funds (ETFs); domestic Fund of Funds with more than 80% of their assets under management invested in domestic funds; and schemes with a duration requirement of less than one year, namely Overnight Funds, Liquid Funds, Ultra Short Duration Funds, and Low Duration Funds.

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Industry Context

The B-30 programme, first introduced in 2012, was designed to deepen mutual fund penetration in smaller towns by paying distributors an extra commission on inflows from these locations. SEBI discontinued the scheme in February 2023 after finding instances of application splitting and churning, despite B-30 assets climbing to around 17% of the mutual fund industry's total assets.