Under SEBI's revised framework for promoting financial inclusion, what additional incentive structure is payable to distributors for onboarding new individual investors from B-30 cities or new women investors?

[ A ]Flat Rs. 50,000 cash grant per new folio regardless of investment amount, deducted directly from the scheme's capital.

[ B ]1% of lumpsum investment (max Rs. 2,000) held for at least 1 year, OR 1% of total 1st year SIP investments (max Rs. 2,000), funded from the 2 bps investor education allocation.[ CORRECT ]

[ C ]50% of the scheme's total entry load charged to the new investor upon application submission.

[ D ]Lifetime exemption from filing Goods and Services Tax (GST) returns for the distributor.

Takeaway

Option B is correct: 1% of lumpsum investment (max Rs. 2,000) held for at least 1 year, OR 1% of total 1st year SIP investments (max Rs. 2,000), funded from the 2 bps investor education allocation.

Derivation

To foster financial inclusion in smaller towns and among women, SEBI introduced an incentive structure for onboarding new individual PANs from B-30 cities and new women investors (Top-30/B-30): (1) Lumpsum: 1% of first application, max Rs. 2,000 (provided investment remains for at least 1 year), (2) SIP: 1% of total investment made in the first year, max Rs. 2,000. These incentives are funded out of the 2 basis points set aside annually by AMCs for investor education and awareness, subject to clawback provisions. This tests inclusion rules. A common trap is confusing incentive caps with general AUM trail rates.

Why the others fail

A — Flat Rs. 50,000 cash grant per new folio regardless of investment amount, deducted directly from the scheme's capital.

Incentives are strictly capped at Rs. 2,000 per eligible investor and funded from investor education reserves, not arbitrary Rs. 50,000 grants.

C — 50% of the scheme's total entry load charged to the new investor upon application submission.

Entry loads are completely banned across all mutual fund schemes, making load-sharing mechanisms impossible.

D — Lifetime exemption from filing Goods and Services Tax (GST) returns for the distributor.

GST exemptions fall strictly under Union Ministry of Finance tax laws, not SEBI mutual fund distribution incentive circulars.