Mutual Fund B-30 Scheme Explained: How It Works, Who Benefits, and Key Investor Insights

By Siddhi Jain | Sep 16, 2025, 19:31 IST

The mutual fund industry has welcomed the revival of the B-30 incentive scheme, a regulatory initiative aimed at expanding mutual fund penetration beyond India’s top 30 cities. The scheme, recently reintroduced with stricter guardrails, rewards distributors for onboarding new investors from smaller towns and semi-urban locations.

While experts believe the new framework will not trigger the same scale of growth as its predecessor, it is still expected to support financial inclusion and encourage long-term retail participation in mutual funds. Here’s a detailed explainer of how the scheme works, what has changed, and what it means for investors, distributors, and the industry at large.

What is the B-30 Scheme?

“B-30” refers to all locations outside the top 30 cities identified by the Association of Mutual Funds in India (AMFI). These regions are typically smaller towns, Tier-2 and Tier-3 cities, where mutual fund penetration has historically been lower compared to metros.

The B-30 scheme incentivizes distributors to bring in new individual investors with fresh PANs from these regions. The purpose is to drive financial literacy, increase investment awareness, and broaden participation in equity and SIP products across India.

Key Features of the New B-30 Framework (2025)

Eligibility: Only new individual investors with a fresh PAN, investing for the first time in mutual funds from a B-30 location.
Incentive Structure: 1% commission to distributors per new investor.
Cap: Maximum ₹2,000 per unique investor, regardless of investment size.
Tracking Mechanism: Incentives will be processed at the industry level, tracked via PAN, ensuring only one distributor can claim per investor.
Payout Model: Settlement will be made annually through a lump-sum payment system.

How the New Scheme Differs from the Old Model

The earlier scheme (2012–Feb 2023) allowed distributors to earn uncapped incentives based on investment percentages. While lucrative, it led to mis-selling, application splitting, and churning. These issues prompted SEBI to discontinue the scheme in 2023.

The 2025 version addresses these concerns with a strict ₹2,000 cap, PAN-based verification, and industry-level payouts. This significantly reduces the risk of misuse while still motivating distributors to focus on small-ticket investors.

Industry Views on the New Scheme

Praveen Kulkarni: “The earnings won’t be as high as before, but this incentive will still encourage distributors to reach smaller markets.”
Sachin Jain, Scripbox: “A 1% cap is fair. It balances distributor motivation with cost control for the industry.”
Deepak Shenoy, CapitalMind: “The ₹2,000 limit minimizes fraud potential while supporting steady B-30 growth.”

Data shows that B-30 assets now account for around 18% of total mutual fund AUM, with most inflows directed toward equity schemes.

What It Means for Different Stakeholders

For Investors in B-30 Regions

No direct impact on returns, since incentives are paid to distributors, not deducted from investor portfolios.
Greater awareness campaigns and outreach by distributors, making it easier for small-town investors to access financial products.
Reduced risk of mis-selling thanks to caps and tracking safeguards.

For Distributors

A shift to a volume-driven model, where adding more small-ticket investors matters more than chasing large lump-sum clients.
Greater competition, as each investor can be claimed only once (PAN-based).
Encouragement to focus on financial literacy programs and SIP-driven onboarding.

For Asset Management Companies (AMCs)

Lower and more predictable customer acquisition costs.
Broader and more sustainable growth in Tier-2 and Tier-3 markets.
Stronger penetration of equity SIP products, which aligns with long-term industry goals.

Quick Illustrations of Incentives

Lump-sum ₹1,00,000 → Incentive = ₹1,000.
Lump-sum ₹5,00,000 → 1% = ₹5,000, but capped at ₹2,000.
SIP ₹5,000/month (₹60,000 annually) → Incentive = ₹600.
SIP ₹20,000/month (₹2,40,000 annually) → 1% = ₹2,400, capped at ₹2,000.

Final Takeaway

The reintroduction of the B-30 scheme marks a measured push toward financial inclusion. While the capped incentives mean distributors won’t earn massive commissions as in the past, the framework ensures fairer practices, protects investors from mis-selling, and strengthens the mutual fund industry’s presence in underpenetrated regions.

For investors, this translates into better accessibility and awareness, especially in smaller towns. For distributors, the focus shifts to scaling outreach and onboarding more first-time investors through SIPs and disciplined investment planning.