Now, all MF investments are subject to fund realisations

Our Bureau Chennai | Updated on September 17, 2020 Published on September 17, 2020

Investments up to ₹2 lakh, currently, get units allotted on the day of application

Market regulator SEBI on Thursday said all mutual fund investors, including those with up to ₹2 lakh investment (except overnight and liquid funds), will get their NAV on the day their money reaches the fund houses.

Currently, fund houses calculate NAV for investments up to ₹2 lakh on the day they receive applications from clients. However, big investors, investing more than ₹2 lakh, have to wait till the realisation of the funds to the asset management companies.

The new rule is applicable from January 2021.

The Securities and Exchange Board of India (SEBI) in 2012 came out with easy rules for investors of up to ₹2 lakh to increase the penetration of mutual fund products and to energise the distribution network.

According to mutual fund experts, the new norm will push even small investors to online transaction instead of current cheque-based investments. “Most of small investors, from small towns and cities prefer transactions through cheque. However, one has to wait and see how they will adopt to new technology,” said a Chennai-based investment advisor.

According to him, even in big cities, a lot of big investors generally pay amount through cheque only. Though the current rule will not impact them, slowly even they will go for online fund transfer using NEFT, RTGS, UPI etc.

There are complaints from investors that even if they give cheque, at times mutual funds take their own time to deposit it and allot the units based on that day’s NAV only instead of the day it received the application and cheque from us, said an investor.

Most fund houses insist on payment before noon so that they can process quickly at their end, the investment advisor said. It should not affect investments made via SIPs, as most of them are already through ECS only, he further said.

According to SEBI, AMCs should put in place a written down policy which inter-alia detail the specific activities, role and responsibilities of teams engaged in fund management, dealing, compliance, risk management, back-office, etc., with regard to order placement, execution of order, trade allocation amongst various schemes and other related matters.

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Published on September 17, 2020
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