Synopsis
Fintech firm Stable Finserv, backed by Peak XV Partners and Lightspeed, faces a ban from distributing mutual funds until November 2026. The Association for Mutual Funds in India imposed the restriction, impacting investors' SIPs. While the exact reason remains unclear, industry insiders suggest potential violations in advertising or documentation. This comes despite recent significant funding for the startup.Listen to this article in summarized format
Stable Finserv runs fixed-income platform Stable Money.
“Citing the registration number, AMFI has barred Stable Money Finserv, which is the licensed mutual fund distributor, from issuing any mutual funds from May 21 to November 20, 2026,” said one of the people.
Mutual fund investors who use Stable Money for their SIPs received transaction failure messages this month over email citing regulatory action on the startup. ET has seen a copy of such an email.
The message stated that the SIP transaction was rejected since the distributor or agent code linked with the investment has been restricted by the fund house or regulatory authorities. The message attributed this transaction failure to a suspension order on the broker.
"We have temporarily paused fresh investments in gold and silver mutual funds, including SIPs and lump-sum investments, while certain aspects of our mutual fund distribution operations are under review," Stable Money cofounder Saurabh Jain said, responding to ET's queries. The company did not share specifics around the development citing the ongoing review process. "We are engaging with the relevant industry and regulatory stakeholders in relation to this review," Jain said.
While ET could not ascertain what made AMFI take such a step, industry insiders ET spoke with said the action could have emanated from violation in advertising guidelines or incorrect documentation submitted by the distributor.
“Stable Money is a new player in this space, there might have been some lapses on their part or communication with the regulatory authorities, but suspension for six months is also a severe punishment,” said the founder of a rival wealthtech startup which competes with Stable Money and is aware of the development.
This comes at a time when Stable Money just closed two funding rounds back-to-back raising $45 million between 2025 and 2026. The startup, founded in 2022, is backed by Fundamentum, Z47, Peak XV Partners, Lightspeed RTP Global and others. Since inception, the startup has raised around $65 million.
On March 27, ET reported that Stable Money was looking to close an additional $15 million in funding from Peak XV Partners and a few of its existing investors at a valuation of $275 million. The startup was founded by ex-Navi senior executive Saurabh Jain and Harish Reddy, who worked at an algo-trading firm previously.
For the Bengaluru-based startup, mutual fund distribution is still a new business and most of its business comes from booking fixed deposits and offering listed corporate bonds. Stable Finserv is regulated as a research analyst by the Securities and Exchange Board of India and is also a licensed mutual fund distributor. The company also has an OBPP (Online Bond Platform Provider) licence.
This is not the first time that regulators have taken strict action against fintech startups for violation of rules, but for Stable Money it comes at a time when its business was growing quickly and investors were queuing up to support the firm.
For Stable Money, the business will not be greatly impacted but it is a reputation risk as well, said another senior industry executive aware of the development.
“Stable is expected to be booking around Rs 300 crore in fixed deposits and Rs 400 crore in corporate bonds every month, but on mutual funds it could be doing around Rs 50-80 crore per month,” said the industry executive.
