SEBI's new rules regarding investment from pool accounts to come into effect from July 1st

30 Jun 2022 , 12:54 PM

From July 1 onwards, mutual fund investments cannot be initiated from a pool account. As per the Securities and Exchange Board of India  (SEBI), first the money has to go from the investor's bank account to the bank account of the mutual fund house. Accordingly, all stock exchanges-led transaction platforms will implement this, which may see some troubling effects initially for investors as well as other stakeholder parties.

SEBI has ordered mutual fund firms to make sure that no mutual fund distributor, online platform, stockbroker, or investment advisor accumulates money from investors in a bank account and then transfers it to the fund house to buy units in schemes for those investors. This is to guarantee that the funds are not misappropriated.

Earlier, Mutual fund investors and distributors have spoken about issues such as delayed confirmations about allotment of units, inability to pay using cheque, RTGS and NEFT, and SIP transaction failures, among others to which it become necessary for SEBI to introduce and initialize some ground rules for a safer future.

According to the new changes on the exchange platform, all the SIPs will stop where your broker used to transfer funds from your broking account balance to the mutual fund house. For that, you have to sign up for fresh National Automated Clearing House (NACH) mandates in favour of the clearing corporation, which can be done online. 

Since June 1, all non-exchange transaction platforms including MF Utility have already implemented this strategy with some glitches but as the time is passing by the situation is improving circumspectly and this may become error-free in the long run.