- SEBI proposes allowing mutual fund investments via employer salary deductions with consent
- Facility limited to listed companies, EPFO-registered firms, and Asset Management Companies
- Mutual fund distributors may receive commissions in units to promote long-term investing
The Securities and Exchange Board of India in a consultation paper on Wednesday has proposed easing rules related to third-party payments in mutual funds, including allowing investments through salary deductions by employers.
Under the proposal, employers may be allowed to invest in mutual funds on behalf of employees through a salary deduction mechanism. SEBI said the salary deduction route would remain optional and require prior consent from employees. As per the draft paper, the facility would be limited to listed companies, EPFO-registered firms, and Asset Management Companies (AMCs) themselves. Employees will need to opt in explicitly to participate in the arrangement, and the investments will continue to be credited directly in the employee's name.
The regulator has also proposed permitting mutual fund distributors to receive commissions in the form of mutual fund units. According to the proposal, commission payouts in mutual funds are aimed at encouraging long-term investing.
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In addition, investors may be allowed to donate a part of their mutual fund investments. The donations would be routed through mutual funds to verified charities.
SEBI said the proposals are aimed at making mutual fund investing more convenient for investors. However, the relaxation would apply only to specific and limited scenarios.
The regulator added that strict checks would continue to remain in place to prevent misuse and fraud. SEBI also clarified that investment proceeds would continue to be credited only to investor bank accounts.
The proposals form part of SEBI's wider effort to modernise the mutual fund framework, streamline investment processes, and improve ease of investing, while ensuring that compliance standards under the Prevention of Money Laundering Act (PMLA) remain fully intact.
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