Mutual fund account pooling: Jul 1 new deadline

The Securities and Exchange Board of India (Sebi) has barred the launch of mutual fund schemes until July 1 to be able to facilitate the discontinuation of the apply of pooling of accounts.

The regulator has agreed to the Association of Mutual Funds in India (Amfi) request to increase the prevailing timeline of April 1 for implementing the discontinuation of pooling of accounts to July 1  The extension within the deadline is to facilitate environment friendly know-how overhaul and its clean transition to serve rising investor wants, the trade physique stated.

“To stay focused on its efficient and effective implementation of the said October 4, 2021, SEBI circular, we as mutual fund industry, have agreed to keep new fund offers (NFOs) launches on hold during this period. We are confident that NFOs will be back on track soon,” stated N S Venkatesh, chief govt, AMFI

According to Amfi, after mutual dialogue and settlement, Sebi has given the mutual fund trade prolonged timelines till July 1, 2022, to allow the trade to herald a excessive degree of operational effectivity within the curiosity of traders and environment friendly functioning of mutual fund subscriptions and redemption.

The platforms of monetary advisers, distributors and brokers have been utilizing the fund pooling mechanism.

When an investor places cash by an aggregator, the cash goes right into a pool account. The cash will get aggregated there and is then despatched to particular person asset administration corporations.

The regulator’s view is that there’s a danger concerned in pooling of accounts as a result of the cash involves the aggregator’s account and there may very well be some scope for misuse at that degree, or delay of the transaction or some scope for errors to occur, which might have an effect on the traders.

“Sebi had given fund houses time till April 1, but they couldn’t stop this practice. Sebi should not extend the timeline beyond July 1,” stated an investor.

“We are confident of faster implementation owing to adoption of new-age technology and with the help of other stakeholders such as stock exchanges and channel partners, so that we can further strengthen investor service and their evolving savings needs towards newer mutual fund solutions,” stated A Balasubramanian, chairman, AMFI.