Now, investors can buy mutual funds worth up to Rs 50000 through their digital wallets. It is a new initiative taken under the purview of SEBI to channelise household savings into the capital market as well as to promote digital payments in the mutual fund industry.
For making investments in mutual funds, your e-wallets should be loaded with cash either through a debit card or net banking facility. If you are loading money through a credit card, cash back or any promotional schemes, you will not be allowed to make any subscription to mutual funds. Moreover, e-wallet issuers are not permitted to offer any kind of direct or indirect incentives such as cash back, for making investment in the mutual fund. Also, when you are making any redemption, the appreciated money will go back to the bank account of a unit holder.
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“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. However, there is still a long way to go, as the majority of transactions are still paper based. It would help relooking at the Rs. 50000 limit for Aadhar based e-KYC, which will truly help investors go online in their mutual fund transactions,” says Kaustubh Belapurkar, Director – Fund Research, Morningstar Investment Adviser.
Currently, 41 active asset management companies (AMCs) are managing average assets under management at Rs 18.58 lakh crore. Also, the total number of mutual fund investor accounts have crossed Rs 5.5 crore and more.
Now, AMCs are also allowing instant online access facility to resident individual investors to get instant funds which are invested in liquid schemes. The capping will be frozen up to Rs 50000 or 90 per cent of the folio value, whichever is lower. However, the AMCs have to provide liquidity out of the available funds from the scheme only where they also need to set up a mechanism to meet the liquidity demand made by investors in future. SEBI has also suggested that to ease out this facility, mutual funds can go for tie-ups with payments banks, provided necessary approvals have to be taken from the RBI.
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“The instant access facility is a welcome move, though this facility has existed in some form with select AMCs. While mutual fund investments are fairly liquid, with redemption proceeds available on the T+1 basis for liquid funds, many investors prefer bank accounts for parking excess funds as liquidity is available almost instantly. The introduction of an instant access facility up to Rs. 50000 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,” says Belapurkar.