From tomorrow, no mutual fund investments will be initiated from pooled accounts. This is in accordance with an order issued by the Securities and Exchange Board of India, which stated that stock brokers, mutual fund distributors, investment advisors, and other service providers participating in mutual fund transactions will cease pooling of money and/or mutual fund units. The funds must now be transferred straight from the investor’s bank account to the mutual fund house’s bank account.
In June, many mutual fund platforms had already conformed with the new restrictions. Sebi just postponed the previous deadline of April 1 until July 1. So, what will be different?
Mutual fund investments will be transferred straight from your account to the fund house’s account. That is, your funds cannot be transferred to a broker’s or an MF platform’s account beforehand. Last month, many investors expressed worry about delayed payment confirmations after certain MF platforms moved away from pooling accounts. However, these platforms said they are trying to improve the systems.