More reports on: SEBI

Sebi permits instant access facility to mutual fund schemes

27 April 2017

To make digitalization in mutual funds easier, securities market regulator SEBI has permitted instant access facility to mutual fund schemes besides allowing the use of e-wallets for investment in mutual funds.

Announcing a slew of measures at his first press briefing after taking over the reins of the market regulator, A K Tyagi, chairman, Sebi said fund houses could offer instant access facility to investors through the online mode.

This would entail withdrawal of the higher of Rs50,000 or 90 per cent of an investor's folio value. Fund houses have been allowed to use the same facility for receiving investments post a tie-up with payments banks.

This facility would be available to resident Indians only for liquid schemes of mutual funds and any fund house currently offering instant withdrawal under any other scheme category would have to discontinue the facility within a month, SEBI mandated.

Kaustubh Belapurkar, director fund research, Morningstar Investment Adviser said ''While mutual fund investments are fairly liquid, with redemption proceeds available on T+1 basis for liquid funds. Many investors prefer Bank accounts for parking excess funds as liquidity is available almost instantly. By introduction of an instant access facility upto Rs50,000, should help investors draw greater comfort of instant access to funds in case of emergencies. But this needs to be coupled with the continuing investor education initiatives to educate investors the benefits of investing in mutual funds, which should help Mutual Funds get a larger share of household savings.

Sebi added that fund houses cannot borrow for providing the instant access facility and have to use their existing money under the scheme.

e-Wallets allowed
Allowing the use of e-wallets for investing in mutual funds, Sebi has restricted the investment limit to Rs50,000 per year.

''Enabling payments through e-wallets adds another payment option for increasing the popularity of online transactions in Mutual Funds, something which has been gaining popularity over the last few years, especially with the younger generation of investors. Though there is still a long way to go, as majority of transactions are still paper based. It would help relooking at the Rs50,000 limit for Aadhar based e-KYC, which will truly help investors go online in their mutual fund transactions, '' Belapurkar added.

However, the use of credit cards and promotional schemes such as cash back facility offered by e-wallets has not been permitted for such investments. The Rs50,000 limit for investment per fund house per year would be an umbrella limit for an investor using e-wallet and/or cash SEBI clarified.

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