Till now, whenever investments were made in mutual funds, money was deducted from the investor’s trading account just like shares. But, from today, the pooling of funds and/or units in any form or manner by the stockbrokers for mutual fund transactions shall be discontinued.
from 1st of July mutual fund investment The pool account cannot be started. The money has to move from the investor’s bank account to the mutual fund house’s bank account, as mandated by the Securities and Exchange Board of India (SEBI) as all transaction platforms supported by stock exchanges will implement the same.
How does this affect mutual fund investors?
Under the new rules, investors’ trading accounts will no longer be used for investing in mutual funds. The money will go directly from the investor’s bank account to the fund house’s bank account. So, if one wants to buy Mutual Funds (MFs), they have to pay the AMCs directly from the bank account. Similarly, after redemption of mutual funds, the credit will come to the bank account linked to the demat account of the investor.
Investors will need to set up a mandate for all their Systematic Investment Plans (SIPs) directly from their bank account as the platforms will have to move to AMC SIP mode of investment for all SIPs.
In October last year, SEBI had issued a circular that does not allow pooling of funds for mutual funds with effect from April 1, 2022, and the deadline was later extended to July 1. The extension in time frame was to facilitate efficient technology overhaul and its smooth transition to service. There is a growing investor need after several complaints of failed SIP transactions.
In order to comply with the new norms, SEBI had also asked the mutual fund industry to stop issuing new fund offers (NFOs). “With a view to focus on our efficient and effective implementation of the said October 4, 2021, SEBI circular, we, as the Mutual Fund Industry, have agreed to put on hold New Fund Offer (NFO) launches during this period . AMFI Chief Executive NS Venkatesh said, “We are confident that NFOs will be back on track soon.
The regulator had asked mutual fund houses to ensure that no mutual fund distributor, online platform, stockbroker or investment advisor has a pool account and then transfers the same to the fund house for purchase of units of the schemes for those investors. . This is to ensure that the money is not misused.