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SEBI Whole Time Member Ananth Narayan G has urged the MF industry to reduce the current redemption cycle in mutual funds.
He was speaking at the 16th ICC Mutual Fund Summit in Kolkata recently.
Ananth Narayan said that in today’s age of instant transfer, NEFT and RTGS, why does it take more than 1 day or in some cases more than 7 days to realize the funds.
The WTM said that SEBI is trying to introduce a T+0 settlement cycle in the capital markets i.e. same day settlement. The mutual fund industry should take the advantage of T+0 to expedite the redemption process.
Ananth Narayan urged the industry to look at what it can do to make the process more efficient for investors.
Currently, while the capital market securities adhere to the T+1 cycle, the similar transaction takes more than one day in mutual fund units. A majority of fund houses follow the T+2 cycle.
T+2 means two business days over and above the day a trade takes place. For example, if someone redeems MF units before the cut off time on Monday, he is likely to receive funds on Wednesday.
