SEBI takes steps to promote digitisation in mutual funds

SEBI in its board meeting decided to take certain steps with an objective to channelise households’ savings into capital market and to promote digitisation in mutual funds.

Following decisions have been taken in the board meeting:

1. Mutual Funds/Asset Management Companies (AMCs) can offer instant access facility (through online mode) of upto Rs 50,000 or 90% of folio value, whichever is lower, to resident individual investors in liquid schemes by applying lower of previous day's NAV or prospective NAV. For providing such facility, AMCs would not be allowed to borrow. Liquidity is to be provided out of the available funds from the scheme and AMCs to put in place a mechanism to meet the liquidity demands.

This facility can also be used for investment in mutual funds through tie-ups with payments banks, provided necessary approvals are taken from the RBI. Presently, any scheme providing this facility would reduce the limit to Rs 50,000 immediately, and other than liquid schemes providing this facility, would completely stop this facility within one month from the date of circular.

2. Investment of upto Rs 50,000 per mutual fund per financial year can be made using e-wallets. However, redemption of such investments can be made only to a bank account of the unit holder. E-wallet issuers must not offer any incentive such as cash back etc., directly or indirectly, for investing in mutual fund scheme through them.

E-wallet’s balance loaded through cash or debit card or net banking, can only be used for subscription to mutual funds schemes and balance loaded through credit card, cash back, promotional scheme etc. should not be allowed for subscription to MF schemes. Further, this limit of Rs 50,000 would be an umbrella limit for investment by an investor through e-wallet and/or cash, per mutual fund per financial year.

The SEBI chairman has been communicating about his intention to take decision related to mutual fund investments and the latest decisions are mere confirmation of the same. Investors can expect more such decisions which will facilitate mutual fund investing via the digital mode in the coming months.