SEBI permits investments in MFs via e-wallets and payment banks

Only balance loaded in e-wallets through debit card or net banking can be used to invest in mutual funds.
By Ravi Samalad |  26-04-17 | 
 
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Ravi Samalad is Assistant Manager - Editoral for Morningstar.in.

In addition to recharging your cell phone and buying movie tickets, you can now use your e-wallet to invest in mutual funds.

In a bid to promote digitalization in mutual funds, SEBI has allowed investments of up to Rs. 50,000 per mutual fund per financial year through e-wallets. However, the redemption proceeds will only go to investor’s bank account.

E-wallet firms will not be allowed to offer any incentives such as cash backs to nudge investors to invest in mutual funds. Only balance loaded in e-wallets through debit card or net banking can be used to invest.

Besides, the regulator has also allowed AMCs to allow instant redemptions (through online mode) of up to Rs. 50,000 or 90% of folio value, whichever is lower, to resident individual investors in liquid schemes by applying lower of previous day NAV or prospective NAV. Instant redemption facility allows investors to get their money in their bank accounts within a few minutes.

Few fund houses are providing instant redemption of up to Rs. 2 lakh per day in ultra-short term funds.

AMCs which are offering this facility in other than liquid funds will have to stop this facility within one month of this circular whereas those who are offering it in liquid funds will have to reduce the redemption limit to Rs. 50,000 or 90% of folio value immediately.

To offer this facility, AMCs will not be allowed to borrow, said SEBI. This facility can also be used for investment in mutual funds through tie-ups with payments banks after seeking RBI’s approval.

Fund officials believe that this move will provide the much-needed boost to increase mutual fund penetration.

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Sudhindra Arsikere
Apr 28 2017 06:55 PM
Pls let us know how we can follow your daily articles?
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