Money from an investor's account will go directly to the mutual fund house, according to a new rule by the securities exchange board of India (SEBI). Brokers will no longer be allowed to accumulate investors’ funds and then buy the MF units under a particular scheme.
The new process was implemented on June 1 by MF Utilities, an industry-promoted platform for transacting MF units. There were teething problems but the platform has said there are rare delays now in allotting units, according to a report by moneycontrol.com.
SEBI took note when several investors complained about the delays in allotments of units. The final units are only allotted once a fund house receives money. The source of the money is also verified before allotment. The moneycontrol report said that banks had failed to submit details of the investors and in some cases, there was a mismatch between the name in the bank account and the one in the folio.
Investors have to update their contact details as SEBI has mandated double-factor authentication using a one-time password (OTP). MF Utility has allowed investors to verify their personal details online.
What MF investors must do
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