Sebi: Gift Cards for Mutual Fund Investments

New Delhi, Mar 25 (PTI) Markets regulator Sebi on Tuesday proposed introducing gift cards or gift prepaid payment instruments (PPIs) for investments in mutual funds to improve financial inclusion through onboarding of new investors in the space.

Under the proposal, the purchaser of Gift PPI can gift the prepaid payment instrument to a recipient, who can then use the instrument to subscribe to mutual fund units, Sebi said in its consultation paper.

These PPIs will be funded only through electronic bank transfer or UPI from an Indian bank account with a validity period of one year from date of issuance.

Sebi suggested a cap of Rs 50,000 per investor per financial year for investments made through gift PPIs.


"The RTAs, on behalf of AMCs will track how much each investor has invested per AMC per financial year through Gift PPI, e-wallets and cash. If the transaction resulting from a Gift PPI redemption crosses Rs 50,000, the RTA will reject the transaction, and the PPI face value will be refunded to the issuer's escrow account," it added.

Traditionally, Gift cards and prepaid solutions have been used in retail purchases and over a period of time their adoption has increased driven by digital payments, offering instant delivery and enhanced security.

The consultation paper comes after the Sebi received a proposal from the Association of Mutual Funds in India (AMFI) to consider allowing Gift PPI as an instrument to invest in units of mutual fund.

According to Sebi, "Gift Card/ Gift PPI is expected to improve financial inclusion through on boarding of new investors in the mutual fund space."  

The Securities and Exchange Board of India (Sebi) has sought public comments on the proposals until April 14.