The Securities and Exchange Board of India (Sebi) on Tuesday floated a novel idea to make investing a little more personal and a lot more accessible. It has proposed allowing gift PPIs (prepaid payment instruments) to be used for buying mutual fund units, effectively turning investments into something you can wrap, send and share.
Under the proposal, investors could gift mutual fund units to friends and family through these instruments, each capped at ₹10,000, valid for a year, and strictly non-reloadable more like a one-time present than a reusable wallet.
The move follows a suggestion from the Association of Mutual Funds in India (AMFI), which sees this as a way to bring first-time investors into the fold. By lowering the psychological barrier to entry, the industry hopes a simple gift could become someone’s first step into financial markets.
How would this work?
Here’s how it would work. The purchaser can pick a mutual fund scheme—particularly useful if the recipient is new to investing—but the final call rests with the beneficiary. They are free to stick with the suggested scheme or switch to another offered by the same asset management company (AMC). Importantly, Sebi has made it clear that the purchaser’s choice won’t count as “investment advice”. If the recipient seeks help from a distributor or advisor, the investment would move into a regular plan.
The mechanics are designed to be simple and familiar. The gift PPI—issued either digitally or in physical form—can be passed on like a gift card. The recipient then claims ownership and uses it to subscribe to mutual fund units via the AMC’s website.
To avoid dormant balances, Sebi has proposed that these PPIs be redeemable only in full. Once redeemed, the beneficiary gets mutual fund units equivalent to the amount loaded, after applicable levies. Any issuance-related charges will be borne by the AMC, keeping the experience friction-light for users.
Built in guardrails
At the same time, the regulator has built in guardrails. The beneficiary must establish legal ownership before redemption, with an added layer of third-party verification by registrar and transfer agents (RTAs). If someone tries to redeem without valid ownership, the transaction can be rejected and the money routed back to the issuer’s escrow account.
There’s also a cap: investments through gift PPIs, e-wallets and cash together cannot exceed ₹50,000 per AMC per financial year for an investor—breaches would trigger rejection.
There’s a safety net for the giver too. If the gift goes unclaimed within its one-year validity, the amount will be refunded to the purchaser’s verified bank account.
While the money flow—from purchaser to beneficiary—will fall under RBI regulations, the eventual mutual fund subscription will continue to be governed by Sebi norms, ensuring regulatory clarity on both ends.
Sebi has now opened the proposal for public consultation, seeking views on key aspects such as scheme selection by the purchaser, the role of distributors, refund mechanisms and the proposed safeguards. Stakeholders have until April 14, 2026, to weigh in.
If it takes off, the idea could add a new cultural layer to investing—where SIPs meet sentiment, and mutual funds become not just a portfolio choice, but a gift with a future.