SEBI Introduces New Security Feature for Mutual Fund Investors
Mutual fund investors in India will soon get an extra layer of security for their investments.
The capital markets regulator Securities and Exchange Board of India (SEBI) has introduced a new voluntary lock-in or debit freeze facility.
With this feature, investors can temporarily block withdrawals or any debit from their mutual fund folios.
This means no one will be able to redeem, switch, or withdraw units from the account until the investor removes the lock.
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Why SEBI Introduced This Feature
The main goal of this step by Securities and Exchange Board of India is to improve digital security.
As more investors are managing their mutual fund investments online, the risk of unauthorized transactions has also increased.
By using this lock feature, investors can secure their accounts and prevent any unwanted transactions.
Once the folio is frozen, no redemption, switching, or debit transaction can take place until the investor unlocks it.
Who Can Use This Facility
This feature will be available for both demat and non-demat mutual fund holdings.
This means investors who hold mutual funds in demat accounts as well as those who invest directly through asset management companies can use this facility.
Initially, the lock and unlock feature will be available through MF Central, a digital platform that allows investors to manage mutual fund transactions and service requests across different fund houses.
When Will the Feature Start
Registrars and Transfer Agents will enable this facility on the platform so investors can easily activate or deactivate the freeze on their mutual fund folios.
According to Securities and Exchange Board of India, this new security feature will come into effect from April 30.
KYC Is Mandatory to Use the Feature
Investors must complete certain requirements to use this facility.
Their mutual fund folio must be KYC compliant and linked with a valid email ID and mobile number.
These contact details will be used for authentication and for sending alerts related to locking or unlocking the folio.
This step is expected to strengthen security and give investors better control over their mutual fund investments.