As per the order of Securities and Exchange Board of India, mutual fund investments will not be initiated from pooled accounts from July 1. The order states that mutual fund distributors, investment advisors, stockbrokers and other service providers involved in mutual fund transactions would no longer pool funds.
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Instead, the money will be transferred from the investor’s bank account to the bank account of the mutual fund house directly. Many platforms offering mutual funds had complied with the new rules in the month of June.
Here’s what investors should do
It is important to note that starting July 1, all the SIPs where your broker transfers funds from your broking account balance to the mutual fund house will not initiate. You have to sign up for fresh National Automated Clearing House mandates in favour of the clearing corporation. While most Mutual Fund houses have altered their SIP systems, intelligent investors must remain vigilant about the change.
Meanwhile, small distributors claim that they were already dealing with the fund house directly.
The Economic Times quoted ‘Ladderup’ founder Raghvendra Nath as saying, “Our mandates were directed to the fund house directly. So, our clients don’t need to bother about it. However, if you are dealing with a bigger distribution firm or an MF platform, they would change it on their level. I don’t think retail investors need to worry about the paperwork”.
CEO’s of various other firms have assured that investors don’t need to worry about doing anything on their own. The distribution platforms will be changing transaction routes.
From July 1, your money invested in mutual funds will not go to a broker’s or the Mutual Fund platform’s account. It will directly go from your account to the mutual fund house’s account. Several investors had earlier raised concerns over delayed confirmations of payment in May 2022 as some Mutual Fund platforms stopped pooling accounts. Later, they confirmed that they are working to rearrange their systems for the ease of investors.
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