SEBI ban on investment in MFs via pool a/c comes into effect

The much-awaited SEBI regulation banning use of brokers’ pool account for mutual fund (MF) transactions will come into force after the deadline was postponed.

All Systematic Investment Plans (SIPs) where the money is transferred from broking account balance to the fund house will stop and investors have to sign up for fresh National Automated Clearing House mandates in favour of the clearing corporation.

Pool account is kind of electronic wallet facility provided by the brokers. Individual investors can store money in the wallet and transfer money to buy MF units in particular scheme. However, investors have to mandatorily transfer money from their own bank account for investing in MFs.

Last October, SEBI had directed the fund houses to not allow stock brokers, MF distributors, investment advisors and other service providers to invest in schemes on behalf of investors using their pool account from April 1, 2022.

However, the Association of Mutual Funds in India (AMFI) moved the market regulator seeking an extension of deadline to July 1 as the process involved technical changes both at the fund house and brokers end. While agreeing on the industry request, SEBI had told fund houses that they will not be allowed to launch new fund offers till its direction on pool account is implemented.