MUMBAI: Moving in tandem with the stock exchanges, the mutual fund (MF) industry on Friday announced shifting to shorter payment cycle. The Association of Mutual Funds in India (AMFI) said all asset management companies (AMCs) will move to T+2 redemption payment cycle for equity schemes from February 1.
Domestic equity markets have moved to T+1 settlement cycle for stocks from Friday, shortening settlement cycle by a day and making availability of funds a day sooner. To pass on this benefit to MF investors, it has been decided to adopt the T+2 redemption payment cycle for equity schemes, and implement this uniformly with effect from February 1, 2023, after allowing a couple of days for the settlement cycle/process to stabilise, said AMFI in a statement.
“T+1 settlement cycle for Indian equity markets is a global first. As an industry, we want to pass on benefit to our MF investors and hence we are adopting a T+2 redemption payment cycle for equity funds,” said A Balasubramanian, MD & CEO of Aditya Birla Mutual Fund and Chairman, AMFI.
Currently, MF industry is following T+3 redemption payment cycle, which means investors have to wait for three days to get their money credited. NS Venkatesh, CEO of AMFI, added that, “Since the day Sebi announced the phased movement of equity markets to T+1 settlement cycle, the industry has been preparing to shorten the redemption payment cycle.”