Kolkata: Sebi has introduced an important and useful feature for mutual fund investors. They will now be able to make their mutual fund investments even more secure. This feature is being referred to as ‘debit freeze’ and it allows investors to temporarily lock their mutual fund folios. While this lock is active, no funds can be withdrawn from that folio, nor can units be redeemed or transferred.
What is the facility?
Under SEBI’s new facility, investors can place a debit freeze on their mutual fund folios. This means that no units can be redeemed, switched, or transferred while the freeze is active. The significant feature of this facility is that it is completely optional, meaning investors can enable or disable it as per their needs. Experts point out that it will be of use when fraudsters are lurking around every corner in this digital age.
This facility will apply to both demat and non-demat accounts. This means that whether your investment is held in a demat account or directly with an asset management company, this facility will work on both accounts. Initially, this facility will be available through the MF Central platform. This is a digital platform where investors can manage mutual funds from different fund houses from a single location. Registrars and transfer agents will provide the lock and unlock facility through this platform.
Conditions for using it
There are a few requirements that must be fulfilled before this feature can be used. The investor’s folio must be updated as per KYC. Moreover, the correct mobile number and email ID must be linked to the folio. These will be used to verify the locking and unlocking process. AMFI, the mutual fund industry body, will set the rules for this facility. It will also determine which transactions will be allowed and which will not during the freeze.
When will the facility be rolled out?
Sebi’s new rules will come into effect on April 30. Mutual fund investments have become increasingly digital in the past few years. Investors are now investing through apps and online platforms. This has increased convenience, but it has also increased the risk of cyber fraud. In such a situation, this new facility will help strengthen investor security.
(Disclaimer: This article is only meant to provide information. News9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds, precious metals, commodity, REITs, InvITs and any form of alternative investment instruments and crypto assets.)
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