Sebi may allow investors to buy mutual funds via digital wallet
Sebi is looking to allow investors to buy mutual funds worth up to Rs50,000 through digital wallets in a move aimed at enabling speedy and easy transactions
Latest News »
- IRDA identifies 6 insurers to take over Sahara India Life Insurance
- Market round-up: Oil’s bearish bets prompt warning of violent rally
- Pro Kabaddi League 2017: advertisers number up three-fold in 5th season
- Corporate rights and the backlash against globalization
- The transformative power of genome editing
New Delhi: Markets regulator Sebi is looking to allow investors to buy mutual funds worth up to Rs50,000 through digital wallets to make it easier for investors to purchase these instruments, especially the youth.
The move would help in speedy and easy transactions while reducing failures due to payment gateway issues. Besides, the Securities and Exchange Board of India (Sebi) is expected to put in place regulations for instant withdrawal facility in liquid mutual fund. Also, asset management companies (AMCs) can tie-up with payment banks to provide digital transaction to investors. The board of Sebi will discuss proposals in this regard next week, sources said.
These new facilities will help in increasing the penetration of mutual funds and help in channelising household savings into capital markets. They would also provide a convenient option to investors to diversify from the traditional saving avenue.
Under the proposal, the total subscription through an e-wallet for an investor should be restricted up to Rs50,000 per mutual fund in a financial year. The regulator may ask AMCs to enter into an agreement with pre-paid payment instruments for facilitating payment from e-wallets of the investors to mutual fund schemes. AMCs will have to ensure that e-wallet issuers must not offer incentives such as cash back directly or indirectly for investing in MFs through them. Further, an e-wallet’s balance, loaded through cash, debit card and net banking, can only be used for subscriptions to mutual funds. However, balance loaded with a credit card, cash back and promotional scheme should not be allowed for purchase of such products.
Sebi may come out with a framework for an instant access facility in liquid schemes, wherein investors can withdraw their funds invested in the scheme within a very short time through an online mechanism. For the instant access facility, the regulator may set a limit of Rs50,000 or 90% of investment, whichever is lower, per day per investor per scheme.
The regulator may mandate fund houses to get prior approval from the AMC board and trustee board before offering this facility to investors and also make appropriate disclosures in offer documents. Currently, 41 AMCs together manage assets worth Rs18.3 lakh crore and mutual fund investor accounts are over Rs5 crore. MFs are investment vehicles made up of a pool of funds collected from a number of investors. The funds are invested in stocks, bonds and money market instruments, among others.