Page 16 - Banking Finance November 2022

MUTUAL FUND

Mutual Fund

Inflows into equity mutual tion of Mutual Funds in India (Amfi) to According to a report, as of 2019 there
prepare a schedule for implementa- were over nine millions MF folios which
funds jump to Rs. 14,000
tion of the new rule by October 14 and were not linked to PAN and most of
crore in September also send a bi-monthly progress report these folios were over 11-12 years' old.
from December 2022. This is because PAN became compul-
Investments in equity mutual funds
sory for MF investments only from
more than doubled to Rs. 14,100 crore
in September against Rs. 6,120 crore AMCs to freeze non-PAN January 1, 2011, when a new set of
know-your-customer (KYC) compliance
in the previous month, with stock mar-
MF folios from April 2023
kets showing resilience in the last norms was adopted by fund houses.
From April 2023, investors will not be
couple of months.
able to invest in mutual fund folios that
Mutual funds add 70 lakh
Inflows into open-ended equity mutual are not linked to their PAN card, the
funds have remained in the positive Association of Mutual Funds in India investor A/c's in Apr-Aug
zone for the 19th straight months. (Amfi) has said in a notification. With increase in digital access and
"No investments (systematic or growing awareness about mutual
OTP validation a must for funds, asset management companies
lumpsum) shall be permitted in such
mutual fund investments folios wherein PAN or PAN exempt KYC (AMCs) have added close to 70 lakh
reference number (PEKRN) are not investor accounts in the first five
from FY24
available. Dividend pay-out by MF months of the current fiscal, bringing
Sebi has extended the two-factor au- schemes to such folios shall also be dis- the total to 13.65 crore.
thentication rule presently applicable allowed," Amfi has said.
This came following an addition of 3.17
on mutual fund (MF) redemptions to
The industry body has asked investors crore investor accounts in 2021-22 and
include MF subscription transactions as
to link such MF accounts with their PAN 81 lakh accounts (or folios in mutual
well.
or PEKRN by March 31, 2023. fund parlance) in 2020-21, data with
According to a circular issued by the the Association of Mutual Funds in In-
Restrictions on redemptions from such
markets regulator, investors will have dia (Amfi) showed.
transactions are already in place since
to authenticate new investments in
September 2019. Amfi had disallowed The sharp increase in mutual fund (MF)
mutual funds through a one-time pass-
redemptions from such accounts after folio count implies that a lot of new
word from April 1, 2023. For offline
the Securities and Exchanges Board of investors are coming into the capital
transactions, the validation will happen
India (Sebi) expressed concerns over
markets and are embracing mutual
through signature.
the high amount of redemptions from funds as their preferred vehicle for in-
The watchdog has asked the Associa- such accounts. vesting.
16 | 2022 | NOVEMBER | BANKING FINANCE