SEBI Proposal: Gift Cards and Prepaid Instruments for Mutual Fund Investment

Source: ET

Context:

The Securities and Exchange Board of India (SEBI) is considering allowing gift cards and prepaid payment instruments (PPIs) to be used for investing in mutual funds. This move aims to make investing simpler and increase retail participation in capital markets.

What is the Proposal?

SEBI proposes that individuals can use gift cards or prepaid instruments to invest in mutual funds. This would allow people to gift investments instead of cash and make entry into financial markets easier.

Key Features

Gift-Based Investment

• Investments can be made through gift cards, allowing people to gift mutual fund units on occasions like birthdays, weddings, or festivals. This promotes the idea of financial gifting.

Investment Limit

• A cap of around ₹50,000 per gift card or prepaid instrument is proposed to prevent misuse and ensure controlled transactions.

Validity Period

• Gift cards are expected to have a limited validity period, likely around one year, encouraging timely use.

Regulatory Safeguards

• All transactions will be monitored under regulatory norms to ensure compliance and prevent misuse such as money laundering.

Integration with Mutual Fund System

• Funds from gift cards will be directly invested into SEBI-regulated mutual fund schemes.