The Securities and Exchange Board of India (SEBI) has proposed a new framework that could allow gift cards and prepaid payment instruments (PPIs) to be used for investing in mutual funds. The proposal, currently in the consultation stage, aims to simplify investment access and bring more first-time investors into the mutual fund ecosystem.
At its core, the proposal introduces the concept of “investment gifting.” Instead of traditional cash gifts or shopping vouchers, individuals could purchase a gift card and transfer it to another person, who can then use the value to invest in mutual funds. This marks a shift from consumption-based gifting to wealth creation.
Under the proposed system, gift cards would be purchased using bank transfers or UPI and must be linked to an Indian bank account. Once gifted, the recipient can redeem the instrument to invest in mutual fund schemes of their choice. The investment decision remains entirely with the recipient, ensuring flexibility and autonomy.
To maintain regulatory discipline, SEBI has outlined several safeguards. Each gift card will have a maximum value of ₹10,000 and will be non-reloadable. These instruments cannot be used for cash withdrawals or bank transfers and must be used strictly for mutual fund investments. Additionally, the total investment through gift cards, e-wallets, and cash will be capped at ₹50,000 per investor per financial year.
A robust monitoring mechanism will be implemented through registrars and transfer agents (RTAs). If an investor exceeds the prescribed annual limit, the transaction will be rejected and the amount will be refunded to the issuer’s escrow account. All transactions will also undergo identity verification and compliance checks, aligning with both RBI and SEBI regulations.
Another important feature is the validity period. Each gift card will remain valid for one year. If it is not used within this timeframe, the funds will be refunded to the purchaser, ensuring that idle balances are not indefinitely locked.
The proposal originated from the Association of Mutual Funds in India (AMFI), with SEBI now seeking public feedback. Comments have been invited until April 14, after which the regulator may finalize the framework and move towards implementation.
The broader objective behind this initiative is financial inclusion. By leveraging familiar tools like gift cards—already widely used in retail and digital payments, SEBI aims to reduce entry barriers for new investors. The idea is to make investing as intuitive as everyday transactions, particularly for young earners and individuals unfamiliar with financial markets.
If implemented, this framework could redefine how people perceive gifting. It shifts the focus from immediate spending to long-term wealth creation, turning a simple gesture into a potential starting point for investment journeys.