MUMBAI: To ensure the digital security of mutual fund investments, the markets watchdog Sebi has introduced a voluntary debit freeze facility for mutual fund investors across demat and non-demat folios.
Sebi said the proposed facility will be effective from April 30 and is aimed at ensuring that no units are debited from mutual fund folios until they are unlocked.
"It is decided that a voluntary debit freeze facility be introduced for mutual fund investors across demat and non-demat (ie statement of account) folios to ensure that no units shall be debited from such folios till the time they are unlocked," Sebi said in its circular.
In the first phase, the facility to lock the folio will be provided to mutual fund investors by the registrar and transfer agents through the MF central platform.
The facility will only be available to KYC-compliant investors who have valid email addresses and mobile numbers and are both mandatory to avail of this facility.
The circular further said the industry lobby Amfi will prescribe the detailed process for locking and unlocking mutual fund folios to all asset management companies/and registrar and transfer agents and will also provide the processes to be followed by different types of investors after consulting with the regulator.
The regulator further said that Amfi has also been asked to prescribe a detailed list of financial transactions and non-financial transactions that are allowed during such a lock-in period to fund houses and registrar and transfer agents.
The detailed process of opting for such a facility and impact on different financial transactions and non-financial transactions during the lock-in period will be disclosed by all fund houses and registrar and transfer agents on their websites and in a statement of additional information.