How does the SEBI ban on pool accounts affect your mutual fund investments?
Explained: how a recent SEBI rule change affects how you will be investing in mutual funds post 1st-Jul-2022.
Explained: how a recent SEBI rule change affects how you will be investing in mutual funds post 1st-Jul-2022.
Originally published: 31-Mar-2022
Updated: 31-Mar-2022 - SEBI has extended the timeline from 01-Apr-22 to 01-July-22
Updated: 05-Jul-2022 - updated with options for investing
SEBI, vide circular no. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2021/634 dated October 4, 2021, discontinued intermediate pooling of funds and/or units in Mutual Fund transactions - SEBI 15Mar22 circular
SEBI has banned the use of pool accounts for mutual fund investments. Instead, investors must invest in a way where their money goes directly from their bank account to the AMC account for buying MF and vice versa for selling MF. You can no longer use an intermediary pool account or wallet used by some platforms.
Sources:
Before the applicability of the circular, these are the modes of operation for buying and selling MF:
After 1st July 2022, only these modes of operation i.e. “Purchase without pool account” and “Direct redemption to bank” are allowed. This is a good thing. This effectively means that your money directly travels between your bank account and AMC account in either case for both buys and sells. The role of the platform is now reduced to passing instructions between the investor and the AMC.
There will not be any impact on investors who were not using any platform with a pool account. Hence platforms like myCAMS and AMC websites will not be affected.
We explain a few cases as described on the respective platform site. Investors should contact the respective platform customer support to understand more.
As explained in their blog post, Groww balance can no longer used for MF purchases. Instead, the investor’s bank account will be debited and the AMC’s account will be credited directly without touching the Groww wallet for both SIP and lump sum. Existing SIP instructions via wallet will fail.
As explained on tradingqna, funds in Zerodha trading account cannot be used for MF. For existing SIPs, investors will be given a payment link on the SIP date. New SIPS will be via bank mandates only. Lump sum investments will work in the usual way via Net-banking and other options.
Updated statement: link
MFUtilities emails on 21 and 23 March to platform users state that:
Paytm money users have been advised (source) to transact in Mutual funds via a Demat account.
These portals should continue to work the same way as before since pooling was not an option before. Therefore, there should be no change in the way old, new SIPs and lump sum investments will happen as usual.
Investors can use the following options to seamlessly transact in mutual funds going forward:
The two options Mfcentral and Mfutilities have all funds. As always, only invest in the DIRECT GROWTH plan of any mutual fund.
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This post titled How does the SEBI ban on pool accounts affect your mutual fund investments? first appeared on 31 Mar 2022 at https://arthgyaan.com