SEBI’s recent proposal can make investing in mutual funds easier for investors. Currently, investments in mutual fund schemes require transfer of money from bank accounts of investors. In order to facilitate this transfer, SEBI has come up with a proposal under which money can be directly deducted from salary of employees and deposited in their mutual fund accounts. This proposal shall be applicable to all listed companies as well as companies registered with EPFO accounts. It shall also be applicable to companies which manage investments and are known as Asset Management Companies. Under this proposed method, a single payment by employer can lead to investments in mutual fund schemes of employee’s choice. Employee can choose to invest in any mutual fund schemes and employer can make payment on their behalf.
SEBI said the current framework was designed to prevent risks linked to third-party payments and ensure compliance with anti-money laundering laws, but the mutual fund industry had sought relaxation in certain scenarios where safeguards could be built in.
SEBI said the current framework was designed to prevent risks linked to third-party payments and ensure compliance with anti-money laundering laws, but the mutual fund industry had sought relaxation in certain scenarios where safeguards could be built in.
Apart from the payroll investment proposal, SEBI has also suggested allowing mutual fund companies to pay trail commissions, fully or partly, to empanelled distributors in the form of mutual fund units. The regulator said this could encourage long-term investing among distributors.
SEBI has come up with another idea – letting investors support good causes through mutual funds. Here’s how it could work: when you put money into a mutual fund, you could choose to set aside a portion of your investment, or the money you get back when you cash out, or even the dividends you earn, to go towards organizations that help people, as long as they are legitimate and follow the rules. This could all be done through a special exchange set up for social causes, which would make sure everything runs smoothly and fairly.
To prevent abuse, the Securities and Exchange Board of India (SEBI) has suggested some safeguards. These include checking the relationship between the person paying and the person getting the money, doing thorough background checks, making sure everyone follows the rules, and keeping a clear record of where the money is going. This way, SEBI can keep track of everything and make sure people are not doing anything wrong. By having these safeguards in place, SEBI can protect investors and prevent any misuse of funds.
The regulator said detailed operational norms may be worked out by the Association of Mutual Funds in India in consultation with SEBI. Public comments on the consultation paper have been invited till June 10.