SEBI Proposes Payroll-Linked SIPs for Easier Mutual Fund Investments

Last updated May 25, 2026

SEBI’s Groundbreaking Proposal for Salary-Linked Mutual Fund Investments in India

SEBI Proposes Payroll-Linked Mutual Fund SIPs for Salaried Professionals

Every month, numerous salaried professionals in India set up systematic investment plans, often seen as a simple and effective investment strategy. These plans allow investors to consistently invest small amounts into mutual funds. However, operational mishaps such as failed auto-debits or outdated mandate forms can often cause issues for these investors.

SEBI’s Revolutionary Proposal

The Securities and Exchange Board of India (SEBI) aims to solve these recurring issues with a single structural change. SEBI has proposed that employers should be able to deduct mutual fund contributions directly from salaries. This would eliminate the common issue of insufficient bank balances and forgetting to update mandate forms when changing banks.

Details of SEBI’s Salary-SIP Link Proposal

SEBI’s proposal includes a plan for payroll-linked systematic investment plan (SIP) investments for employees at listed companies and firms registered with the Employees’ Provident Fund Organisation (EPFO), as well as asset management companies. Participation would be voluntary and comply with Know Your Customer (KYC) regulations.

SEBI’s game-changing proposal is currently open for public feedback until June 10th. Investors can learn more about the proposal and submit their opinions here.

Who Stands to Benefit

This proposal would be beneficial for those who prefer a “set-it-and-forget-it” investment strategy, like the provident fund. Salaried staff of listed companies or those registered with EPFO who prefer not to handle manual bank mandates would also benefit. However, the proposal would not be beneficial for freelancers, daily-wage earners, and those working at unregistered firms who lack a structured payroll system.

Additional Proposals by SEBI

In addition to the payroll-SIP link, SEBI’s proposal includes a plan to allow investors to donate mutual fund returns to verified social causes. This innovative idea would enable socially conscious investors to contribute to causes they care about directly through their investments.

Safeguards for the Proposal

To mitigate potential risks, SEBI has also outlined strict safeguards for the proposal. These include full KYC compliance for both payee and beneficiary, a written mandate, and a clear non-cash electronic audit trail. Asset management companies would need to ensure transparency and guarantee that employees retain full access to their redemption proceeds.

Gig Workers and the Proposal

While the proposal is promising for salaried professionals, it offers little for gig workers, freelancers, or those engaged in unorganised MSMEs. Such individuals often lack a structured payroll system and, therefore, may not benefit from this new system.

Lastly, the proposal’s real power is behavioural. Deducting investments before a salary hits a bank account removes one of the biggest obstacles to consistent investing. The temptation to spend first and invest later is significantly reduced, promoting better financial habits.

Please note, the information provided here does not constitute investment advice. Always seek professional advice before making investment decisions.