SEBI has clarified that mutual fund companies can open multiple current accounts across banks and branch offices to facilitate new purchase, honour redemption, pay dividend and commission to distributors among other things.
This has come after fund houses approached SEBI to clarify if they are allowed to open multiple current accounts across banks to facilitate these transactions and facilities to investors.
Earlier, RBI instructed banks that they should open current accounts only when the customer avails credit facilities like cash credit or overdraft facility from banking system. In a further clarification, RBI said that mutual funds could open such an account for NFOs, share buyback and dividend payment. However, there were ambiguity if open-end schemes were allowed to open current accounts.
In a circular, SEBI said, “Based on the request of mutual fund industry, it is clarified that mutual funds should maintain current accounts in an appropriate number of banks for the purpose of receiving subscription amount and for payment of redemption / dividend / brokerage/ commission etc. to facilitate financial inclusion, convenience of investors and ease of doing business.”
