Mutual Fund Account Consolidation: New Deadline of July 1
The Securities and Exchange Board of India (Sebi) has banned the launch of mutual fund schemes until July 1 to facilitate the abandonment of the practice of pooling accounts.
The regulator has accepted a request from the Association of Mutual Funds in India (Amfi) to extend the existing April 1 deadline for implementing the account pooling shutdown until July 1. The extension of the deadline aims to facilitate an efficient redesign of the technology and its smooth transition to meet the growing needs of investors, the industry body said.
“To remain focused on its effective and efficient implementation of said SEBI Circular of October 4, 2021, we as the mutual fund industry have agreed to suspend launches of New Fund Offerings (NFOs) during this period. We are confident that NFOs will soon be back on track,” said NS Venkatesh, Director General of AMFI.
According to Amfi, after mutual discussion and agreement, Sebi has granted the mutual fund industry extended deadlines until July 1, 2022, to allow the industry to bring a high level of operational efficiency in the interests of investors and the efficient operation of subscriptions to mutual funds. and redemption.
The platforms of financial advisors, distributors and brokers use the mechanism of pooling funds.
The regulator is of the view that there is a risk associated with account pooling because the money is coming into the account of the aggregator and there could be a possibility of abuse of this level, or a delay in the transaction or some possibility of errors, which could affect investors.
“Sebi had given finance companies time until April 1, but they couldn’t stop this practice. Sebi should not extend the deadline beyond July 1,” an investor said.
“We are confident of faster implementation through the adoption of new era technology and with the help of other stakeholders such as exchanges and distribution partners, so that we can further strengthen the service to investors and their evolving savings needs towards new mutual fund solutions,” said A Balasubramanian, Chairman of AMFI.