MUMBAI: The Securities and Exchange Board of India (SEBI) has barred the mutual fund industry from issuing new fund offers (NFOs) as a regulator. gives industry time To comply with your new norms.
NFO is the first step in starting a mutual fund.
The regulator had asked mutual fund houses to ensure that no mutual fund distributor, online platform, stockbroker or investment advisor has a pool account and then transfers the same to the fund house for purchase of units of the schemes for those investors. . This is to ensure that the money is not misused.
In a letter issued to Association of Mutual Funds in India (Amfi), the regulator has called upon the industry to implement their respective circulars on two-factor authentication for redemption of mutual funds and verification of source accounts when mutual fund investments are made. goes. ,
Fund houses can launch new schemes only after following the above circulars of SEBI.
The circular was issued on 4 October 2021 and thereafter on 15 March 2022 for the industry to comply with the above rules. However, compliance is pending.
AMFI had made various representations to the regulator seeking extension of the time limit. On Thursday, SEBI extended the said deadline to July 1, 2022. But to ensure compliance, the regulator has also suspended fresh fund proposals for the time being.
new rules
The circular on pooled accounts is meant to address the risk of a broker taking money in his account for mutual funds and then defaulting. Money going directly to the fund house or stock exchange allows it to face this risk.
Two Factor Authentication rule will mean, for example, an additional OTP (One Time Password) will be sent to the customer for mutual fund redemption. It aims to reduce the risk of fraud in the industry. Similarly, verification of source accounts aims to eliminate the risk of money laundering in mutual fund investments.
download
The app will get 14 days of unlimited access to Mint Premium absolutely free!