Instant Access Facility and Use of e-wallet for investment in Mutual Funds
Summary
This circular establishes guidelines for the Instant Access Facility (IAF) allowing same-day redemption proceeds for specific mutual fund investors. It permits the use of e-wallets for mutual fund investments subject to regulatory compliance and monetary limits. The document mandates immediate implementation and outlines the statutory powers under which SEBI issues these directives.
Text
IAF facilitates credit of redemption proceeds in the bank account of the investor on the same day of redemption request.
IAF shall be allowed through online mechanism and only for resident individual investors.
Where the IAF application is received up to 3.00 pm – the lower of (i) NAV of previous calendar day and (ii) NAV of calendar day on which application is received; where after 3.00 pm – the lower of (i) NAV of calendar day on which such application is received, and (ii) NAV of the next calendar day.
MFs/ AMCs can offer IAF only in Liquid schemes of the MF.
The monetary limit under IAF shall be INR 50,000/- or 90% of latest value of investment in the scheme, whichever is lower. This limit shall be applicable per day per scheme per investor.
Liquidity for IAF has to be provided out of the available funds with the scheme... AMCs offering IAF may set aside in cash at least 3 times of – the higher of, last one month’s or three month’s daily average of redemptions under instant access on a rolling day basis.
MFs/ AMCs cannot borrow to meet the redemption requirements under IAF.
AMCs shall make appropriate disclosures in the scheme related documents about IAF and ensure that no mis-selling is done on the pretext of instant availability of funds to the investors.
Appropriate disclosures shall be made to the investors mentioning the scenarios under which IAF may be suspended and that IAF request would be processed as a normal redemption request in such circumstances.
MFs/ AMCs shall offer IAF only after obtaining approvals from the AMC Board and the Trustees and keep in place adequate safeguards in the system to implement this facility.
IAF shall also be considered while carrying out stress testing of the schemes.
MFs/ AMCs offering this facility in any of their schemes shall reduce the limit to INR 50,000/- with immediate effect and schemes other than liquid schemes having this facility shall discontinue this facility within one month from the date of this circular.
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Source: SecMarx — Instant Access Facility and Use of e-wallet for investment in Mutual Funds. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.