The Securities and Exchange Board of India (SEBI) on 23 May 2026 was reported to be actively examining a major proposal for salary-linked Systematic Investment Plans (SIPs) under which mutual fund investments could be deducted directly from employee salaries and routed into chosen mutual fund schemes, on the lines of Employees' Provident Fund (EPF) subscriptions. If approved, the change would transform mutual fund participation from a discretionary decision to a routine financial behaviour embedded in salary structures, with significant implications for household savings, capital market deepening and retirement adequacy. India already has more than 10 crore mutual fund folios and SIP monthly inflows have crossed Rs 26,000 crore in recent months, yet penetration remains well below comparable economies. The salary-linked SIP would require coordination with employers, EPFO, the Income Tax Department and Asset Management Companies, with safeguards on portability when an employee changes jobs and on consent and risk profiling. The proposal complements other SEBI reforms including UPI-based pre-IPO investments, T plus 0 settlement, Mutual Funds Lite for passive funds and Specialised Investment Funds for high-risk strategies. SEBI is a statutory regulator established under the SEBI Act, 1992 with the mandate of protecting investor interests, promoting development and regulating the securities market, and is currently chaired by Tuhin Kanta Pandey.
Securities and Exchange Board of India Examines Proposals for Salary Linked Systematic Investment Plans on 23 May 2026 That Would Permit Direct Deduction of Mutual Fund Investments from Employee Salaries on the Lines of EPF Subscriptions, in a Move Designed to Mainstream Household Financial Savings Through Organised Capital Markets and Deepen Mutual Fund Penetration in India
SEBI on 23 May 2026 is examining a proposal for salary-linked SIPs that would allow mutual fund investments to be deducted directly from employee salaries on the lines of EPF, aiming to deepen mutual fund penetration, boost household financial savings and embed equity investing into salary structures.
Key facts
- SEBI on 23 May 2026 examining proposals for salary-linked Systematic Investment Plans on the lines of EPF deductions
- Salary-linked SIPs would allow mutual fund investments to be deducted directly from employee salaries and routed into chosen schemes
- India has more than 10 crore mutual fund folios and SIP monthly inflows have crossed Rs 26,000 crore in recent months
- Proposal complements other SEBI reforms including UPI-based pre-IPO investments, T+0 settlement, Mutual Funds Lite and Specialised Investment Funds
- Requires coordination with employers, EPFO, Income Tax Department and AMCs with safeguards on portability, consent and risk profiling
- SEBI was established under the SEBI Act, 1992 with the mandate of investor protection, market development and regulation; chaired by Tuhin Kanta Pandey
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Practice MCQ from this story
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Consider the following two statements regarding SEBI and Systematic Investment Plans: 1. SEBI was given statutory status under the SEBI Act, 1992 with the mandate of protecting investor interests, promoting the development of and regulating the securities market. 2. Under the salary-linked SIP proposal being examined by SEBI on 23 May 2026, mutual fund investments could be deducted directly from employee salaries on the lines of EPF subscriptions. Which of the statements given above is/are correct?
Both statements are correct. The Securities and Exchange Board of India (SEBI) was given statutory status under the SEBI Act, 1992 with a three-fold mandate: protecting the interests of investors, promoting the development of the securities market, and regulating it. The salary-linked SIP proposal being examined by SEBI on 23 May 2026 would allow mutual fund investments to be deducted directly from an employee's salary by the employer on the lines of EPF subscriptions and routed into chosen mutual fund schemes, deepening household participation in capital markets and complementing reforms like UPI-based pre-IPO investments and T+0 settlement.
Source: Business Today
Frequently asked questions
What is a Systematic Investment Plan (SIP)?
A SIP is a method of investing in mutual funds where an investor contributes a fixed sum at regular intervals (typically monthly), enabling rupee-cost averaging and disciplined investing through small, predictable contributions.
How would a salary-linked SIP work?
Under the SEBI proposal, mutual fund investments could be deducted directly from an employee's salary by the employer, on the lines of EPF deductions, and routed into chosen mutual fund schemes with proper consent, risk profiling and portability safeguards.
Under which law was SEBI established?
The Securities and Exchange Board of India (SEBI) was given statutory status under the SEBI Act, 1992, with the mandate to protect investor interests, promote the development of and regulate the securities market in India.
What is the current scale of SIP inflows in India?
India has more than 10 crore mutual fund folios and monthly SIP inflows have crossed Rs 26,000 crore in recent months, reflecting growing retail participation in capital markets.
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