Investors can buy mutual funds through digital wallets: Sebi

Investors will be permitted to purchase mutual funds worth up to Rs 50,000 through digital wallets with the market regulator Sebi today approving the proposal.

The proposal, part of efforts to channelise household savings into the capital market as well as promote digital payments in the mutual funds industry, was approved by the Sebi board during its meeting here.

"Investments up to Rs 50,000 per mutual fund per financial year can be made using e-wallets," the regulator said while redemptions of such investments can be made only to the bank account of a unit holder.

E-wallet issuers would not be permitted to offer any incentive such as cash back, directly or indirectly, for investing in mutual fund scheme through them.

Besides, the e-wallet's balance loaded through cash or debit card or net banking can only be used for subscription to mutual funds schemes.

Balance loaded through credit card, cash back, promotional schemes would not be allowed for subscription to mutual funds.

The limit of Rs 50,000 would be an umbrella limit for investment by an investor through e-wallet and/or cash, per mutual fund, Sebi said in a release.

Besides, mutual funds and asset management companies have been allowed to provide instant online access facility to resident individual investors in liquid schemes.

In this case, the limit would be up to Rs 50,000 or 90 per cent of folio value, whichever is lower.

For providing such facility AMCs would not be allowed to borrow. Liquidity is to be provided out of the available funds from the scheme and AMCs to put in place a mechanism to meet the liquidity demands.

"This facility can also be used for investment in mutual funds through tie-ups with payments banks provided necessary approvals are taken from the RBI," Sebi said.

Currently, any scheme providing the facility would reduce the limit to Rs 50,000 immediately.

As many as 41 active asset management companies (AMCs) together manage assets worth Rs 18.3 lakh crore and mutual fund investor accounts are over 5 crore.

Mutual funds are investment vehicles made up of a pool of funds collected from a number of investors. The funds are invested in stocks, bonds and money market instruments, among others.