Mutual Fund Investment: When the minor, in whose name the investment was made, attains the status of major, he/she will be required to provide all KYC details, updated bank account and other details
How to invest in Mutual Fund in the name of minor child: Several policy developments for Mutual Fund investors were okayed by the Securities and Exchange Board of India (SEBI) last month. One of the popular development was the introduction of a framework by the markets regulator for investments in mutual funds in the name of minor through guardian and to ease the process of transmission of such schemes. SEBI came out with a framework for making investment in mutual funds in the name of minor through guardian and to ease the process for transmission of such schemes. The move was aimed at bringing uniformity in such investment process across asset management companies (AMCs). The move is aimed at bringing uniformity in such investment process across asset management companies (AMCs), SEBI said in its monthly bulletin for January 2020.
MF investment in the name of minor
The regulator said payment for investment by means of cheque, demand draft or any other mode will be accepted from the bank account of the minor or from a joint account of the minor with the guardian only. For existing folios, “the AMCs shall insist upon a Change of Pay-out Bank mandate before redemption is processed,” SEBI said.
When the minor, in whose name the investment was made, attains the status of major, he/she will be required to provide all KYC details, updated bank account details including cancelled original cheque leaf of the new account. Also, no further transactions shall be allowed till the status of the minor is changed to major.
According to SEBI, AMCs are required to “build a system control at the account set up stage of Systematic Investment Plan (SIP), Systematic Transfer Plan (STP) and Systematic Withdrawal Plan (SWP) on the basis of which, the standing instruction is suspended when the minor attains majority, till the status is changed to major.”
To improve the processing turnaround time for transmission requests, AMCs will implement image-based processing wherever the claimant is a nominee or a joint holder in the investor folio.
AMCs will have to implement a uniform process for treatment of unclaimed funds to be transferred to the claimant including the unclaimed dividends
The regulator also asked AMFI to prescribe the forms and formats, common set of documents, and uniform process for treatment of unclaimed funds, within 30 days from date of issuance of the circular.