The Securities and Exchange Board of India (Sebi) on Wednesday allowed the use of e-wallet for investments in mutual funds for up to Rs 50,000 per financial year. Sebi also said redemptions of such investments can be made only to a bank account of the unit holder. The e-wallet issuers must not offer any incentive such as cashback, directly or indirectly for investing in mutual fund schemes through them, it added. The markets regulator also brought in uniform norms for instant access facility (IAF) in liquid schemes.
“Mutual Funds/Asset Management Companies (AMCs) can offer instant access facility (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. For providing such facility AMCs would not be allowed to borrow,” Sebi said in a release.
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Currently, fund houses such as Reliance Mutual Fund, Birla Sun Life Mutual Fund and DSP BlackRock Mutual Fund among others allow instant redemptions from their liquid schemes.
Now many of the schemes provide maximum redemptions of Rs 2 lakh per day or 95% of the amount in their account, whichever is lower. Under this facility, funds will send the redemption proceeds into the registered bank account of the investor instantly from the time of receipt of Instant Redemption request using Immediate Payment Service (IMPS) provided by various banks.
Senior officials in Sebi said it is not mandatory, but up to the fund houses to provide this option. 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. We have given the broad guidelines and now its upto fund houses to put a mechanism in place.”
Sebi also added that this facility can also be used for investment in mutual funds through tie-ups with payments banks provided necessary approvals are taken from RBI. Currently, 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.
“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,” concluded Sebi. Mutual fund participants lauded the move as they expect new tech-savvy investors would be attracted by this move to invest in mutual funds.