Home / Mutual Funds / News /  Zerodha users can't use funds in trading account to buy mutual funds. Here's why
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Starting today, Securities and Exchange Board of India (SEBI) has disallowed the use of funds in trading account for investing in mutual funds (MFs). Therefore, there has been issue with mutual fund transactions on Zerodha's Coin app.

If you have made the payments for your AMC SIP through the payment link shared by BSE then you need not make the payment again from Coin, Zerodha further said. “Your orders will be processed today. However, for future transactions please make the payments through the Coin app and ignore any emails sent by BSE. SIPs scheduled today will not be triggered," it added. 

“Funds in the Zerodha account cannot be used for mutual fund investments starting July 1, 2022. Funds for mutual fund purchases have to transferred from the primary bank account linked with Zerodha to ICCL," said the online brokerage firm in an FAQ, adding that the redemption proceeds will also be credited to investor's primary bank account.

The new payment flow on the Coin app is as follows: Payment can be made through UPI for orders less than 2 lakh, through netbanking for orders more than 2 lakh and NEFT or RTGS have payment modes have to be used for orders above 1 crore, it added.

Until now, whenever investments were made in mutual funds, the money would be deducted from the investor's trading account just like stocks. But, from today, pooling of funds and/or units by stock brokers in any form or manner shall be discontinued for mutual fund transactions.

The money has to go from the investor's bank account to the bank account of the mutual fund house, as mandated by Securities and Exchange Board of India (SEBI) as all transaction platforms backed by stock exchanges will implement this.

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