SEBI proposes to create a framework to permit third party payments in mutual funds to carry forward mutual fund distribution to newer platforms and also to fulfill anti-money laundering (AML) standards.
Key Proposals Include:
SIPs through Payroll: The first option to make mutual fund investments through third-party payments is to facilitate payroll linked SIPs (Systematic Investment Plans) through the payroll of employees. Such payroll linked SIPs can be made active if employee’s investment is restricted to (i) listed equity / equity derivatives; (ii) EPFO registered establishments; and (iii) registered Asset Management Companies (AMCs). Employee will have to ‘opt in’ for such investment through employer.
Mutual Fund Units for Distributor Commission: AMCs can now pay their distributors of mutual funds in MF units as opposed to cash. This is designed to help build into long term investing and would ensure that the distributor’s interest is in line with the MF’s performance.
Social Donations: Investors can also now make social donations while investing in a mutual fund. This can be done through various structures like buying Zero Coupon Zero Principal (ZCZP) instruments or donating to a listed non- government organization (NGO). SEBI has proposed a framework for social donations and has incorporated robust anti-money laundering measures including stringent KYC norms to ensure that such transactions are carried out in a transparent manner and are in compliance with anti-money laundering regulations.
The intent of SEBI is to ensure that the framework proposed for third party payments in mutual funds is compliant with anti-money laundering laws. The board intends to ensure that necessary checks and balances are placed to ensure KYC verification is stringent. Comments/feedback to the consultation paper has to be submitted to SEBI by June 10, 2026.