The Securities and Exchange Board of India (Sebi) on Tuesday issued a circular to ease norms for one-time mandate in transactions in units of mutual funds, after several representations from stakeholders and recommendations from the Mutual Fund Advisory Committee, for smooth implementation of the circular issued back in 2021. The clarifications pertain to transactions in mutual funds on stock exchanges and entities including online platforms other than stock exchanges.
The markets regulator on Tuesday said that one-time mandates in favour of Sebi-recognised clearing corporations may be accepted. Further, existing mandates being used for mutual fund transactions can continue to remain in the name of the stock brokers/clearing member.
Earlier in October 2021, Sebi had stated that stock brokers/clearing members facilitating mutual fund transactions should not accept payment through one-time mandate or issuance of mandates/ nstruments in their name for mutual fund transactions.
The new norms are subject to asset management companies ensuring that the PA (payment aggregator) puts in place mechanisms wherein beneficiary of the mandate can only be an approved bank account of a mutual fund pool account or mutual fund scheme account.
“On or after April 01, 2022, new mandates shall be accepted only in favour of Sebi recognised Clearing Corporations and those mandates shall exclusively be for subscriptions to units of Mutual Fund schemes and not for any other purpose,” Sebi said on Tuesday.