“Gift investments, not cash”: Sebi plans mutual fund vouchers with ₹50,000 limit

In a move aimed at simplifying investing and expanding financial inclusion, the Securities and Exchange Board of India (Sebi) has proposed allowing mutual fund investments through gift vouchers, enabling individuals to gift investments instead of cash or traditional gift cards. The proposal introduces a new instrument called Gift Prepaid Payment Instruments (PPIs), which could transform how people approach both gifting and investing.

Under the proposed framework, individuals will be able to purchase these prepaid instruments using bank transfers or UPI and gift them to recipients such as family members, friends, or children. The recipient can then redeem the value to invest directly in mutual fund schemes, making the process straightforward and accessible, particularly for first-time investors unfamiliar with traditional investment procedures.

To ensure security and prevent misuse, Sebi has outlined several safeguards. The total value of such gift instruments will be capped at ₹50,000 per person per financial year. Transactions will be allowed only through digital modes such as bank transfers or UPI, with no cash funding permitted. Additionally, each gift instrument will carry a validity of one year, and registrars and transfer agents will monitor transactions to maintain transparency.

The proposal comes in response to recommendations from the Association of Mutual Funds in India (AMFI), which suggested using such instruments to broaden participation in financial markets. Sebi believes that converting gifting into an investment opportunity could act as an entry point for individuals who have not yet engaged with mutual funds, thereby deepening retail participation.

Sebi has invited public feedback on the proposal until April 14, after which a final framework may be considered. If implemented, the initiative could mark a significant shift in India’s investment landscape by merging everyday financial habits like gifting with long-term wealth creation, especially among younger and first-time investors.