SEBI considers introducing Gift Cards and Gift PPIs to invest in MFs
SEBI considers introducing Gift Cards and Gift PPIs to invest in MFs
SEBI considers introducing Gift Cards and Gift PPIs to invest in MFs
To improve financial inclusion through investor integration in mutual funds (MFs), the Securities and Exchange Board of India (SEBI) is considering launching Gift Cards/Gift Prepaid Payment Instruments (PPIs).
The proposal means the Gift PPI purchaser can gift it to a recipient for subscribing to MF units.
The PPIs would be funded only through electronic bank transfer or UPI from an Indian bank account. Its validity would be one year from the date of issuance. However, there would be a cap of Rs.50,000 per investor per financial year for such investments.
The consultation paper further read: "The Registrar and Transfer Agents (RTAs), on behalf of Asset Management Companies (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.”
Traditionally, Gift cards and prepaid solutions have been used in retail purchases. But, in recent years, driven by digital payments offering instant delivery and enhanced security, their acquisition has increased.
SEBI’s consultation paper is the result of a proposal from the Association of Mutual Funds in India (AMFI) to allow Gift PPI as an instrument to invest in MF units.
The market regulator stated, "It is hoped that Gift Card/Gift PPI will improve financial inclusion through onboarding of new investors in the MF space."