Fund houses told to allow transfer of units between demat accounts

The Securities and Exchange Board of India (Sebi) has asked asset management companies (AMCs) not to prohibit transfer of mutual fund units between demat accounts. According to the new regulations, a unit, unless otherwise restricted or prohibited under the scheme, shall be freely transferable by act of parties, or by operation of law.

“However, it is observed that mutual fund schemes prohibit transfer on a regular basis,” said Sebi in a note on Wednesday. In order to facilitate transfer of units, AMCs would have to clarify by way of an addendum (addition to a certain document) that units of all mutual fund schemes held in demat form should be freely transferable by October 1.

However, restrictions on transfer of units of equity-linked saving schemes during the lock-in period would continue, added the note.