Under the new framework, investors will be able to lock their mutual fund folios, ensuring that no units are debited from the account until the folio is unlocked. The facility will come into effect from April 30, the regulator said in a circular.
“In order to enhance investor protection, it is decided that a voluntary debit freeze facility be introduced for mutual fund investors across demat and non-demat (Statement of Account) folios to ensure that no units shall be debited from such folios till the time they are unlocked,” SEBI said.
In the first phase, the option to lock folios will be made available through the MF Central platform by Registrars and Transfer Agents (RTAs). The facility will be available only to KYC-compliant investors who have both a valid email ID and mobile number registered with the system.
Industry body Association of Mutual Funds in India (AMFI) will prescribe the detailed operational process for locking and unlocking folios for asset management companies (AMCs) and RTAs. AMFI will also outline the procedures applicable to different categories of investors in consultation with SEBI.
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Additionally, AMFI has been tasked with specifying the list of financial and non-financial transactions that will remain permitted during the lock period.
Asset management companies and RTAs will disclose the detailed process for opting for the facility and the impact on transactions during the lock period on their respective websites and in their Statement of Additional Information, the regulator said.