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SEBI has asked MF distributors through AMFI to update bank details of their clients linked to mutual fund folios with Core Banking Solutions (CBS) details.
In a circular, AMFI said, “SEBI has advised AMFI to instruct the MFDs to ensure that they update the CBS bank account details in respect of their clients on top priority in a time bound manner.”
Further, the market regulator has instructed distributors not to receive fresh investment from non-CBS bank accounts. AMFI said, “You are advised to ensure that all fresh transactions in respect of your clients are invariably submitted with CBS bank account details only. Please note that transactions received with non-CBS bank account details are liable to be rejected.”
CBS is a system which allows customers to do transactions across any branch. Experts believe that very old bank accounts and change in account numbers due to merger of banks largely fall under this.
The market regulator observed that while CBS has been in existence for years, there are a lot of MF folios without CBS details. In a circular, AMFI said, “SEBI has observed that despite the banking industry moving to Core Banking Solutions (CBS) accounts, there are large number of mutual fund folios across the mutual funds where the investors' CBS account details have still not been updated. As a result, it is becoming difficult for the AMCs to validate the account number as well as crediting the amount electronically into the investors' bank accounts.”
Earlier, SEBI formed a working group to explore ways to update the existing MF folios with CBS account details. On analysing, SEBI found that large no. of transactions is still happening with non-CBS bank account details, especially in respect of investors having bank account with such banks which have switched to CBS bank accounts long time back.
