SEBI allows parents to invest in minor MF folio from their bank account

SEBI has allowed AMCs to receive investment from bank account of parents or guardian in minor MF account. 

So far, SEBI norms allowed investment in mutual funds from bank account of minors. SEBI said, “Payment for investment by any mode shall be accepted from the bank account of the minor, parent or legal guardian of the minor, or from a joint account of the minor with parent or legal guardian.  For existing folios, the AMCs shall insist   upon a change of pay-out bank mandate before redemption is processed.”

However, SEBI clarified that redemption proceeds has to be credited in the bank account of the minor post completion of KYC irrespective of the source of investment. 

Currently, when a minor becomes a major on attaining 18 years of age, she has to complete the KYC process in her own capacity and notify each of the concerned mutual funds by filling up a prescribed ‘minor attaining majority form’ in order to be able to transact further in her folios.

The new change come into effect from June 15, 2023.