Sebi Al­lows Cash In­vest­ments of Up to .` 50,000 in MFs

The Economic Times - - Markets + Finance - OUR BUREAU

In­vestors with­out Per­ma­nent Ac­count Num­ber (PAN) can now put as much as .` 50,000 in mu­tual funds in cash ev­ery year. Sebi on Thurs­day said it was in­creas­ing the limit for cash in­vest­ments to .` 50,000 from .` 20,000. The move is aimed at help­ing mu­tual funds sell prod­ucts in small towns and ru­ral ar­eas, where trans­ac­tions hap­pen in cash rather than through banks. Sebi has been push­ing mu­tual funds to spread to towns out­side the top-15 cities. Some large fund houses made a rep­re­sen­ta­tion to Sebi that rais­ing the cash limit would help them tap the smaller towns. Mu­tual fund of­fi­cials said the move will ben­e­fit only some as­set man­age­ment com­pa­nies as ma­jor­ity of the in­dus­try still pre­fer in­vestors with a PAN and bank ac­count. “We have stayed away from this ar­range­ment be­cause of the var­i­ous is­sues of han­dling cash,” said Arvind Sethi, Man­ag­ing Di­rec­tor & CEO at Tata As­set Man­age­ment. Many mu­tual funds are wary about in­vestors us­ing this sys­tem to bring in unac­counted money. Also, re­demp­tions are pro­cessed only through bank ac­counts, mak­ing it manda­tory for in­vestors to open one even if they buy mu­tual fund units in cash.

“Lo­gis­ti­cally, it is a nightmare un­less a mu­tual fund does not have deep pock­ets or an ex­ist­ing ru­ral net­work,” said the chief mar­ket­ing of­fi­cer with a pri­vate mu­tual fund.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.