The Securities and Exchange Board of India (SEBI) on March 24, 2026, issued Consultation Paper on introduction of Gift Card/ Gift PPI (Prepaid Payment Instrument) for Mutual Funds.
The objective of this consultation paper is to solicit comments on the proposal to introduce Gift Card/ Gift PPI for subscription of mutual fund units. The proposal involves allowing purchaser of Gift Card/ Gift PPI to gift such instrument which can be utilized for subscription of mutual fund units by the recipient of Gift Card/ Gift PPI.
Gift Card/ Gift PPI is expected to improve financial inclusion through onboarding of new investors in the mutual fund space.
SEBI is examining a proposal from the Association of Mutual Funds in India (AMFI) to allow Gift Prepaid Payment Instruments (Gift PPIs) as a mode for investing in mutual funds. Under this model, a purchaser can buy a Gift PPI (gift card), transfer it to a beneficiary, and the recipient can redeem it to subscribe to mutual fund units through an Asset Management Company’s platform. The overall flow of funds would be governed by RBI guidelines for PPIs, while mutual fund transactions would remain subject to SEBI regulations.
Existing SEBI rules already permit use of e-wallets for mutual fund investments with safeguards such as compliance with cut-off timings, restriction of ₹50,000 per investor per financial year, prohibition on incentives like cashback, and adherence to “no third-party payment” norms. Redemption proceeds must be credited only to the investor’s bank account, and only funds loaded through legitimate banking channels can be used.
RBI regulations define PPIs as instruments for purchasing goods, services, and financial products, with strict safeguards including KYC compliance and anti-money laundering measures. Gift PPIs specifically have a maximum value limit of ₹10,000, are non-reloadable, and do not allow cash withdrawal or fund transfer (except back to the source account under certain conditions). They must have a minimum validity period and issuers must notify users before expiry, while unclaimed balances must be safeguarded for a specified period.
Overall, the proposal seeks to introduce a regulated, secure mechanism to enable gifting of mutual fund investments, while ensuring compliance with both SEBI and RBI frameworks.
Public comments are invited for the proposals as mentioned. The comments/ suggestions should be submitted through the following link by April 14, 2026:
https://www.sebi.gov.in/sebiweb/publiccommentv2/PublicCommentAction.do?doPublicComm
