Ajay Tyagi, SEBI Chairman, has asked all stakeholders – fund houses, distributors and investors – to give their feedback on instant withdrawal facility and e-wallet transaction. He was speaking to MF officials and distributors at an industry event held recently in Mumbai.
The Chairman said that the market regulator recently introduced two new facilities, instant redemption to ease the redemption procedure, and e-wallet transaction in mutual funds. He said that SEBI wants to understand the progress of both these initiatives. He also said that the market regulator is open to receive other such ideas from stakeholders to grow the Rs20 trillion mutual fund industry.
Earlier in April, SEBI allowed fund houses to provide instant redemption in liquid funds. It, however, put a limit of Rs50,000 or 90% of folio value, whichever is lower, on such redemption.
Similarly, SEBI allowed fund houses to facilitate transaction in mutual funds of up to Rs50,000 through e-wallets/digital wallets. e-wallet is an online pre-paid account which can be used to recharge mobiles, buy movie tickets and much more. Paytm, Bhim and Pay U Money are among the e-wallets with the largest user base in India. Such e-wallets are already popular in foreign markets.
MF industry officials say that while the instant withdrawal facility has been gaining traction among investors as they have started using liquid funds to manage cash flows, just like savings bank accounts, e-wallet has got few takers.
While a few fund houses have enabled an additional mode of payment through which investors can execute transactions in mutual funds through e-payment wallets like Unified Payment Interface (UPI), they are yet to see traction through this payment mode. Other digital wallets like Paytm and Pay U Money are yet to allow mutual fund transactions from their platforms.
A senior official of a large fund house told Cafemutual that since redemption proceeds directly go to the bank account linked to the wallet, these companies are not finding it worthwhile to provide such a facility to their users.
