Only four AMCs provide this facility to their investors.
Market regulator SEBI increased the cash transactions investment limit in mutual funds from the current Rs. 20,000 to Rs. 50,000. One can invest Rs. 50,000 per mutual fund, per year without a PAN card.
To expand the reach of mutual funds in hinterland, SEBI in September 2012, allowed fund houses to accept up to Rs. 20,000 in cash.
While one can invest by cash, redemption proceeds are paid only through the banking channel. That means the investor needs to open a bank account to get the redemption money. Fund houses have tied up with banks to offer this facility.
Currently HDFC, Birla Sun Life, Peerless and UTI allow cash transactions in their schemes. Many fund houses are shying away from facilitating this option because of the costs and complexities involved in the process.
Fund houses have to comply with the Prevention of Prevention of Money Laundering Act, 2002 (PMLA) as a part of the due diligence for providing this facility.
