Under the proposed framework, an individual can purchase a gift PPI – either digitally or in physical form – through banking channels and transfer it to a recipient. The recipient, after claiming ownership, can redeem the instrument to invest in mutual fund schemes via an asset management company (AMC) platform.
The move is aimed at attracting first-time investors and improving access to financial products.
The issuance and operation of PPIs will continue to be governed by Reserve Bank of India (RBI) rules, while mutual fund transactions will fall under Sebi regulations. Gift PPIs will be capped at ₹10,000, will be non-reloadable, and valid for one year, Sebi said in a consultation paper on Tuesday.
The regulator has proposed a series of safeguards, including mandatory third-party validation checks to confirm ownership, compliance with ‘no third-party payment’ norms, and an investment cap of ₹50,000 per investor per mutual fund per financial year across PPIs, e-wallets, and cash.
To prevent idle balances, the entire value of the gift PPI must be invested. If the instrument remains unclaimed after one year, the amount will be refunded to the purchaser’s bank account, Sebi said.
While the purchaser may suggest a mutual fund scheme, the recipient will retain full discretion over the final investment choice. Investors can also choose to invest directly or through distributors. Sebi has sought public comments on the proposal by April 14.
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