Sebi Proposes Gift Cards for Mutual Fund Investments to Boost Financial Inclusion
New Delhi: In a significant move aimed at expanding retail participation in financial markets, the Securities and Exchange Board of India (Sebi) on Tuesday proposed introducing gift cards or prepaid payment instruments (PPIs) for investing in mutual funds.
What the Proposal Says
According to Sebi’s consultation paper released on March 24, individuals will be able to purchase Gift PPIs and transfer them to recipients, who can then use these instruments to invest in mutual fund units. These prepaid instruments will be funded only via bank transfers or UPI from Indian accounts and will remain valid for one year.
To ensure regulatory control, Sebi has proposed a cap of ₹50,000 per investor per financial year through such instruments. Registrar and Transfer Agents (RTAs), acting on behalf of Asset Management Companies (AMCs), will monitor transactions and reject any investment exceeding the prescribed limit.
The proposal follows a recommendation from the Association of Mutual Funds in India (AMFI), which advocated using gift-based financial tools to attract new investors. Gift cards have traditionally been used in retail but are now increasingly being explored in financial services due to their ease of use and digital reach.
Why It Matters
The initiative is expected to bring first-time investors into the mutual fund ecosystem, especially younger and digitally active users. Sebi has invited public comments on the proposal until April 14, indicating a consultative approach before final implementation.
If approved, the move could redefine how Indians enter financial markets, blending gifting culture with investment opportunities.
Our Final Thoughts
Sebi’s proposal reflects a broader shift towards simplifying investment access in India. By integrating gift-based instruments with mutual funds, regulators are tapping into behavioural finance trends and digital payment habits. While safeguards like transaction caps are necessary to prevent misuse, the concept has the potential to introduce investing to a new demographic, especially younger users and first-time participants. If implemented effectively, this could strengthen financial inclusion and deepen India’s investment ecosystem in the coming years.