Home / Markets / Stock Markets /  SEBI reduces redemption and dividend payout time limits in mutual funds. Check details here

Good news for mutual fund unit holders! The Securities and Exchange Board of India (SEBI) has now reduced the timeline of the payout of redemption and dividends to mutual fund unit holders. The regulator has reduced the timeline for redemption payout to three working days from the existing ten working days. This means now, if you wish to redeem units of a mutual fund scheme, you may do so and get the redemption amount within three working days. Besides, SEBI has further reduced the timeline for dividends payout from 15 to 7 working days. These dividend payouts are mostly profits that the companies share with the unit holders.

Harshad Chetanwala, Co-founder MyWeathGrowth said, “This is good for mutual fund investors; however, most of the fund houses were ensuring the redemption payout of equity schemes within 3 business days at present as well. Hence, from that perspective, it will not be much stress or change in the process for fund houses and RTAs."

Experts say that investors usually prefer investing in mutual funds because there is liquidity, and the money comes back quickly into their bank accounts when they redeem units. And now, with this amendment, mutual fund investing will gain good traction and inflows in mutual funds can see better results in the coming months.

“This amendment has come in good times because, according to an Association of Mutual Funds in India (Amfi) report, the inflows into open-ended equity mutual funds slumped 31% to 6,119.58 crore in August month."

The mutual fund SIP assets under management (AUM) at 6.39 lakh crore as a percentage of mutual fund overall average AUM ( 39.53 lakh crore) stood at well over 16%, signifying healthier and disciplined investment by small investors. Further, the number of SIP accounts stood at an all-time high at 5.71 crore in August, crossing the June high of 5.61 crore.

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