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SEBI has issued a notification in which it has stipulated that fund houses will have to pay penalty if they delay settlement of redemption proceeds and dividend payment.
However, the rule has been around for quite some time. Industry officials told Cafemutual that the market regulator will reduce the settlement time through this circular.
They say that fund house will have to pay penalty if a fund house delays settlement of redemption proceeds beyond 7 days or payment of dividend beyond 15 days.
So far, fund houses are allowed to settle redemption proceeds within 10 days and dividend payment within 30 days without paying any penalty.
Currently, the penalty imposed on such delays is 15% per annum on pro-rata basis. SEBI may review this penalty charge as well, say industry officials.
