Sebi bars new mutual funds offers for 3 months
14-04-2022 10:54:13
The Securities and Exchange Board of India ( Sebi ) has barred mutual funds from launching fresh schemes until the industry complies with the regulator's new rules. These include discontinuing the practice of pooling client money for mutual fund (MF) transactions on the stock exchanges and other online platforms, among others.
Sebi has also put in place tighter pre-transaction authentication requirements for MF products - steps aimed at reducing the likelihood of investors' money being misused.
Sebi had extended the April 1 deadline to comply with regulations to July 1 on Thursday night. "Approvals of new schemes may be kept on hold to ensure undivided attention in the proper execution of this project in coordination with a large number of stakeholders," Sebi said in a letter to the Association of Mutual Funds of India (Amfi) lobby group. ET has seen a copy of the letter.
Operational efficiency and investor protection are of utmost importance, and for a smooth transition, the regulator has given us some more time," said A Balasubramanian, chairman of Amfi.
By stopping new fund offers, Sebi has put onus on the industry to ensure online intermediaries comply with regulations, said executives. Online platforms and distributors contribute 15-20% of MFs' total monthly flows, according to unofficial estimates
