What changes for Mutual Funds From July 1?

As per the SEBI ruling, henceforth entities involved in the mutual fund transactions such as investment advisors, mutual fund distributors, stock brokers etc. can no longer engage in pooling of funds or mutual fund units. This simply means now onwards i.e. beginning July 1, against a mutual fund scheme, the amount shall directly be credited from investor's bank account to mutual fund's bank account.

What changes for Mutual Funds From July 1?

It is pertinent to note that until this far, against any mutual fund investment, the money was generally debited from the trading account similar to stocks.

Earlier the deadline to meet or comply with the ruling was April 2022, which was later extended to July.

What will happen with the said ruling in force?

So, as there will no longer be pooling of funds happening or will remain restricted, your money against the scheme shall not be transferred to any other intermediary so to say the mutual fund platform or broker etc. but will be credited into your mutual funds' bank account directly.

What should investors do?

As no longer can the funds from your broking account be transferred against your mutual fund scheme/SIP you now need to sign up a fresh mandate against the SIP or mutual fund payment with the clearing corporation.

"Usually, the data has to be in place. We have made our systems better since the circular came out. Investors don't need to worry about doing anything on their own. The distribution platforms have to change the transaction routes. Most of the platforms including us have already done it," the CEO of a big mutual fund distribution and research firm is cited as saying in a leading dailies on the development.

GoodReturns.in