Listen to this article
AMFI has asked mutual fund companies to reduce settlement cycle from T+3 to T+2 from February 1.
This has come after settlement cycle of equity markets has reduced to T+1 settlement cycle form January 27. In a communication, AMFI said, “From today, Indian equity markets move to T+1 settlement cycle for all stocks, shortening the settlement cycle by a day and making availability of funds a day sooner than at present. To pass on this benefit to mutual fund investors, it has been decided all AMCs will move to T+2 redemption payment cycle for equity schemes and implement this uniformly with effect from February 1, 2023, (i.e., for all transactions received before cut off timing on Feb. 1, 2023 and processed at closing NAV for February 1 2023) after allowing a couple of days for the settlement cycle /process to stabilise.”
A Balasubramanian, MD & CEO Aditya Birla Mutual Fund and Chairman, AMFI said, “T+1 settlement cycle for Indian equity markets is a global first. As an industry, we want to pass on the benefit to our mutual fund investors and hence we are proactively adopting a T+2 redemption payment cycle for equity funds.”
NS Venkatesh, CEO, AMFI added, “AMFI and its member AMCs always keep investor interest at the forefront. Since the day SEBI announced the phased movement of equity markets to T+1 settlement cycle, the industry has been preparing to shorten the redemption payment cycle and we are happy to announce the shift to T+2 redemption payment cycle effective February 1, 2023 onwards.”
Lav Kumar, Zonal head, LIC MF believes that the move will help the MF industry expedite redemption cycle. He said that the MF industry will become more popular among retail investors due to this.
