The rules of the game in mutual funds are changing quicker than ever. The Securities and Exchange Board of India (Sebi) recently announced a set of changes that make it easier to invest in mutual funds. The regulator has permitted people to use e-wallets to invest, and has allowed instant redemptions up to Rs50,000 from liquid funds into bank accounts.
Yet, what Sebi seems to have missed is that the existing infrastructure for settlement and confirmation of mutual fund investments is almost totally geared towards offline, paper-based transactions. The unfortunate image that comes to mind is that of a rocket being carried on a bullock-cart. Much like the advent of dematerialization in the early 2000s, the entire settlement and trade confirmation system needs a reboot so that the investor base can grow to many times its current size.
