Fund houses have discontinued accepting purchase transactions in mutual funds through debit cards. This has come after SEBI has pointed out the issues regarding verification of such transactions, said fund officials.
While many fund houses have discontinued facilitating such transactions, a few fund houses which are currently offering this facility will soon stop it.
A senior AMC official requesting anonymity told Cafemutual that the market regulator has brought up this issue at a recently held meeting. “We have discontinued facilitating debit card transaction in mutual funds after SEBI’s order. We were getting 60-70 transactions a day through this route.”
He further said that the key reason for discontinuation of this facility is difficulty in verification of third party transactions. “We don’t have mechanism to find out if the debit card transaction is done by the investor on his own. On the other hand, transaction through net banking requires authentication to execute transaction and hence, all AMCs facilitate transaction through it.”
A senior spokesperson from KFintech says that, “As per regulation, mutual fund purchases have to be done through own account of an investor and third party payments are strictly not allowed. We have tied up with payment gateways to receive payments from investors. These payment gateways cannot authenticate if an investor uses debit card on his own to execute purchase transactions. Hence, we have discontinued offering such a facility.”
CAMS spokesperson also said that the RTAs cannot trace investor details if he executes MF transactions through debit card. In addition, it was not as popular among investors as not many investors have executed transaction in mutual funds through debit card. Most investors prefer netbanking to execute transaction in mutual funds, he said.
