SEBI Suggests Salary Deduction Route For Mutual Fund SIPs

The Securities and Exchange Board of India (SEBI) has suggested a new framework. As per the proposal, salaried individuals could invest in mutual funds directly through payroll deductions, much like the existing contribution systems for Employees’ Provident Fund (EPF) and National Pension Scheme (NPS). The proposal is part of a broader consultation paper released by the market regulator on 20 May 2026.

Under the current rules, mutual fund investments must be made directly from an investor’s own verified bank account. The framework was originally designed to prevent misuse, maintain a proper audit trail and comply with anti-money laundering norms under the Prevention of Money Laundering Act (PMLA).

What SEBI Has Proposed

SEBI has now suggested allowing third-party payments in certain regulated situations, with salary deductions being one of the key proposals. According to the draft framework, employers would be allowed to deduct a fixed amount from employees’ salaries and invest the money into mutual fund schemes selected by employees.

The regulator said the move aims to make investing more convenient and improve long-term financial participation among salaried individuals. The proposed mechanism would enable Asset Management Companies (AMCs) to receive consolidated payments from employers on behalf of employees.

However, the facility may not be open to all employers immediately. As per reports, the proposal may allow listed companies, EPFO-linked firms and AMCs to participate under strict compliance and monitoring conditions.

Similar To EPF And NPS Contributions

The proposed system mirrors the payroll deduction structure already used for EPF and NPS contributions in India. If implemented, employees could automatically invest in mutual funds every month without requiring manual transactions or separate SIP payments.

Market experts believe the move could improve retail participation in mutual funds and promote regular investing among salaried individuals.

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Other Changes Under Consideration

Apart from salary-linked investments, SEBI has also proposed allowing certain other third-party payment scenarios in mutual funds. These include payment of distributor commissions by AMCs in the form of mutual fund units and enabling investors to donate part of their investments or returns towards social causes.

The regulator stressed that any relaxation in third-party payment rules would still require strong safeguards in place to prevent misuse and maintain investor protection standards.

Sources:

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