SEBI initiates voluntary debit freeze provision to MF folios

SEBI initiates voluntary debit freeze provision to MF folios

The scheme will come into effect from 30 April

The Securities and Exchange Board of India (SEBI) has introduced a voluntary debit freeze facility for mutual fund (MF) investors across demat and non-demat folios to promote their digital security. This will ensure that no units are debited from MF folios until they are undone.

The SEBI circular read, "It is decided that a voluntary debit freeze facility be introduced for mutual fund investors across demat and non-demat (Statement of Account) folios to ensure that no units shall be debited from such folios till the time they are unlocked.”

The first phase of the facility would be offered to MF investors by the Registrar and Transfer Agent (RTA) through the MFCentral platform. It will be available only to KYC-compliant investors having a mandatory valid email ID and mobile number.

The industry body, the Association of Mutual Funds in India (AMFI), would undertake the process for locking and unlocking folios to all asset management companies (AMCs), Registrar and Transfer Agents (RTAs). It will also provide the processes to be followed by varied types of investors after consulting SEBI.

Meanwhile, AMFI has been told to prescribe the detailed list of financial transactions and non-financial transactions that are allowed during such a lock-in period to AMCs and RTAs.

The procedure of opting for the facility and its impact on financial and non-financial transactions during the lock-in period would be disclosed as a statement of additional information by all AMCs/RTAs on their websites.