Deadline for SEBI ban on pooling of cash and mutual fund items prolonged to July 1 

Starting from April 1, 2022, inventory brokers, mutual fund distributors, funding advisors and different service suppliers concerned in mutual fund transactions for his or her shoppers had been purported to cease pooling of funds and / or mutual fund items. This was to adjust to the Securities and Exchange Board of India (SEBI) October 2021 round barring such pooling.  

The intent behind the SEBI transfer was to make sure the protection of investor cash and stop its potential misuse by intermediaries concerned in such transactions.  

However, in a last-minute change, SEBI has prolonged the deadline for stopping this pooling of funds and MF items to July 1, 2022, offering a three-month breather to such entities.  

According to Ashish Rathi, Whole Time Director, HDFC Securities, beneath the prevailing system, while you place a purchase order for mutual fund items by way of a inventory dealer, cash out of your account is credited to the dealer’s pool account. From there, the cash goes to the account of NSE Clearing or BSE Clearing Corporation to be credited to the mutual fund AMC’s account.  

Once this pooling is stopped, then funds will transfer straight from the investor’s account to the NSE Clearing or BSE Clearing Corporation and to not the inventory dealer’s account. Similarly, mutual fund items too are purported to be straight credited to the investor’s account (in instances the place this isn’t occurring at present) as soon as the SEBI-initiated transfer comes into impact.  

Several different measures such because the requirement for two-factor authentication for on-line redemption requests, too fashioned a part of SEBI’s October 2021 round. The deadline for these, too have been prolonged by a number of months.

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