The Securities and Exchange Board of India (SEBI) has put forward an important proposal for mutual fund investors. At present, people can invest only through their own bank accounts. But this rule may soon change.
SEBI is now considering allowing third-party payments for mutual fund investments. This means your company or employer may be able to deduct money directly from your salary and invest it in a mutual fund on your behalf.
Big Relief for Salaried Employees
This new system could be very useful for salaried people who want to save and invest regularly.
Under the proposal, companies may be allowed to cut a fixed amount from employees’ salaries and send it directly to mutual fund companies, also known as AMCs.
At this stage, this facility is being considered for employees of listed companies, institutions registered with EPFO, and mutual fund companies themselves.
If this rule is approved, it may make investing easier and more disciplined for working professionals.
Distributors May Get Mutual Fund Units
SEBI’s proposal also includes a change for mutual fund distributors.
Instead of paying commission in cash, asset management companies may be allowed to give distributors mutual fund units. These units will be issued only in the distributor’s own name, so the benefit goes to the right person.
To make this system safe, distributors will need to register with AMFI. Companies and RTAs will also have to follow strict KYC and anti-money laundering rules.
Donations Through Mutual Funds May Become Easier
The proposal also brings a new idea for charity and social donations.
Mutual fund investors may soon be able to donate part of their investment amount, dividend, or redemption money to NGOs. These donations will go through Zero Coupon Zero Principal (ZCZP) instruments and will be linked to non-profit organizations listed on the Social Stock Exchange.
This move is expected to make donations more transparent and reduce fraud done in the name of fake NGOs.