Mutual funds to be auto-invested from salaries, similar to EPF:Govt to allow companies to invest on behalf of employees

The government of India body, Securities and Exchange Board of India (Sebi) has proposed allowing employers or organisations to make mutual fund investments on behalf of their employees through deductions from salaries. This will be similar to how employers deduct provident fund contributions from employees’ salaries. “The proposed scenario acknowledges the established practice of employers offering various benefits and savings avenues to their employees. This mechanism would allow AMCs to accept consolidated payments for mutual fund investments through salary deduction,” the Sebi’s consultation paper said, according to news agency, ANI. All listed and EPFO-registered companies and the Asset Management Companies (AMCs) will be eligible for the investment scheme but the onus for opting for the scheme will lie on the employees. It will be at their discretion whether the employers will deduct salaries for the purpose or not. It will be a completely on a voluntary basis. According to the regulator, “only interested employees may opt for such an arrangement and agree for salary deduction for MF schemes of their choice.”
Currently, SEBI rules mandate that all payments for investments in mutual funds originate directly from the investor’s own bank account. Public comments on the proposals can be submitted till 10 June, 2026. Types of mutual fund schemes? Mutual funds offer a powerful way to grow wealth. Choosing the right category is essential for maximising returns and managing risk. Whether you’re an aggressive investor seeking high-growth opportunities or a conservative investor looking for stability, understanding different mutual fund types is crucial. A. Equity Mutual Funds Equity mutual funds, as mandated by the Securities and Exchange Board of India (Sebi), must invest at least 65% of their assets in stocks. Equity mutual fund categories: Large-cap funds: Invest in the top 100 companies by market capitalization—ideal for stability and steady growth. Mid-cap funds: Focus on the 101st-250th largest companies—higher risk but potential for superior returns. Small-cap funds: Target companies ranked 251st and beyond—highest growth potential with increased volatility. B. Debt Mutual Funds Debt mutual funds invest in fixed-income securities like government and corporate bonds and treasury bills. They offer stability and predictable returns, making them suitable for low-risk investors. Debt mutual fund categories: Liquid funds: Invest in short-term securities (up to 91 days)—ideal for emergency funds. Short-term debt funds: Best for investors with a 1-3 year horizon. Long-term debt funds: A solid fixed-income alternative to bank FDs. C. Hybrid Funds Hybrid funds combine equity and debt investments, offering both growth and stability. They are ideal for investors seeking balanced risk exposure. Hybrid fund types include: Aggressive hybrid funds: Allocate 65%-80% to equities for higher returns with moderate risk. Conservative hybrid funds: Prioritise debt investments for lower risk and steady growth. Dynamic asset allocation funds: Adjust equity-debt exposure based on market conditions.