The Securities and Exchange Board of India (SEBI) issues a circular to mitigate norms related to the one-time mandate for mutual fund transactions. This move comes after various stakeholders’ representations and recommendations from the Mutual Fund Advisory Committee to facilitate the smooth implementation of the circular issued in 2021. The clarifications are related to mutual fund transactions on stock exchanges and entities comprising online platforms apart from stock exchanges.
Current mandates being used for mutual fund transactions will persist in the name of the stockbrokers/clearing members. In October 2021, SEBI had mentioned that stockbrokers and clearing members assisting mutual fund transactions should not approve payments made via one-time mandate or issuance of instruments/mandates in their name for mutual fund transactions.
The new norms will be subject to asset management companies ensuring that the payment aggregator places a mechanism wherein the beneficiary of a mandate can only be an approved bank account of a mutual fund scheme account or a mutual fund pool account.
On or after 1 April 2022, new mandates will be acknowledged only in favour of SEBI recognised Clearing Corporations. Those mandates will exclusively be for subscriptions related to units of mutual fund schemes and not for any other purposes.
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