Sebi bans mutual fund scheme launches till pool accounts are discontinued

Sebi bans mutual fund scheme launches till pool accounts are discontinued

Sushmita Goswami | Apr 18, 2022 |

Sebi bans mutual fund scheme launches till pool accounts are discontinued

The Securities and Exchange Board of India (SEBI), India’s capital markets regulator, has put a moratorium on the launch of mutual fund schemes till July 1.

SEBI has blocked new mutual fund schemes until pool accounts are phased out, according to a letter sent to the industry organization Association of Mutual Funds of India (AMFI) late Friday night.

Mutual fund houses have been urged by the markets watchdog to verify that no distributor, online platform, stockbroker, or investment advisor combines investors’ money in a bank account and then transfers it to the fund company to purchase units of schemes for those investors. This is to ensure that the funds are not misappropriated. The mutual fund industry has until April 1, 2022 to comply with the regulator’s request.

AMFI had requested a deferral of the deadline from SEBI late last month, citing the fact that the broking and distribution industries were still in the process of implementing alternative systems.

While the MF industry was given temporary relief until July 1, SEBI made it clear in its letter to AMFI that it had given mutual funds “sufficient time” to implement its October 2021 order on pool accounts, and that “wide consultations were held with all stakeholders, including AMFI, before issuing the circulars dated October 2021.”

The decision was made in the best interests of unitholders, according to SEBI. The regulator also reminded AMFI of its earlier commitment to put all new schemes on hold until the issue is resolved.

Source: Money Control

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