The capital markets regulator Securities and Exchange Board of India (Sebi) has barred the launch of mutual fund schemes till at July 1.
In a letter to the industry body Association of Mutual Funds of India (AMFI) late last night, Sebi barred new mutual fund schemes till the use of pool accounts are discontinued.
The markets watchdog had asked mutual fund houses to ensure that no distributor, online platform, stockbroker or investment advisor pools investors’ money in a bank account and then transfer it to the fund house for purchasing units of schemes for those investors. This is to ensure that the money does not get misused. The regulator asked the mutual fund industry to implement this from April 1, 2022.
AMFI had appealed to Sebi late last month for a postponement of the deadline since the broking and distribution industry were still in the middle of implementing the alternative mechanisms.
While Sebi gave relief to the MF industry till July 1, it also made it clear in its letter to AMFI that since it had given “sufficient time” to mutual funds to implement its October 2021 order on pool accounts, and “wide consultations were held with all stakeholders, including AMFI, before issuing the circulars dated October 2021”.
Sebi said it took the decision in the best interest of unitholders. The regulator also reminded AMFI on its earlier promise that all new schemes may be put on hold till the matter is solved.