Consultation Paper; Dated: 24.03.2026
SEBI has released a consultation paper proposing to introduce gift cards or gift prepaid payment instruments (PPIs) for investments in Mutual Funds. The proposal involves allowing the purchaser of Gift Card/Gift PPI to gift such an instrument, which can be utilised by the recipient of Gift Card/Gift PPI to subscribe to mutual fund units. Gift Card/ Gift PPI is expected to improve financial inclusion through the onboarding of new investors in the mutual fund space.
These are the following uses of e-wallets for investment in mutual funds:
(a) Mutual funds (MFs)/Asset management Companies (AMCs) are allowed to enter into arrangements with issuers of PPIs for facilitating payment from e-wallets to mutual fund schemes.
(b) MFs/AMCs must ensure that extant regulations, such as cut-off timings, time stamping, etc., are complied with for investment in MFs using e-wallets.
(c) Redemption proceeds must only be made in the bank account of the investor/unit holder.
(d) Total subscription through e-wallet and cash for an investor is restricted to INR 50,000 per MF per FY (financial year).
(e) E-wallets must not offer any incentives such as cashback, vouchers etc., directly or indirectly for investing in MFs.
(f) MFs/AMCs must ensure that only amounts loaded into the e-wallet through cash, debit card, or net banking can be used for subscription to MF schemes. Credit cards, cash back, and promotional schemes cannot be used.
(g) MFs/AMCs must also comply with the requirement of no third-party payment norm for investments made using e-wallets.
PPI instruments are governed under the RBI Master Directions on Prepaid Payment Instruments (PPIs). The relevant provisions are summarised as follows:
(a) Banks and non-bank entities can issue PPIs after obtaining the necessary approval/authorisation from the RBI under the Payment and Settlement Systems Act, 2007.
(b) PPI is defined as “Instruments that facilitate the purchase of goods and services, financial services, remittance facilities, etc., against the value stored therein.
(c) PPI can be loaded by cash, bank account, debit card, credit card, etc. No interest is payable on PPI balances.
(d) PPI issuer must caution the PPI holder at reasonable intervals, during the 45 days’ before expiry of the validity period of the PPI.
These are the Specific guidelines for Gift PPI under the RBI Master Directions:
(a) The maximum value of each such prepaid payment gift instrument (Gift PPI) must not exceed INR 10,000/-. Such an instrument must not be reloadable.
(b) The PPI issuer must maintain KYC details of the purchaser of Gift PPI.
(c) PPI issuer must adopt a risk-based approach, duly approved by its Board, in deciding the number of such instruments which can be issued to a customer, transaction limits, etc.
(d) Cash-out or funds transfer must not be permitted for such an instrument. However, the funds may be transferred back to the source account upon the PPI holder’s consent.
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