Deadline to ban pooling of money and mutual fund units extended to July 1

Online platforms and brokers got some more time to comply with the new Sebi guidelines on pooling of money and mutual fund units. Earlier, Sebi asked these entities to stop pooling money and mutual funds units from April 1.

Securities and Exchange Board of India has come out with an update on the previous circular. The new circular has given a three month extension on their previous notice in October. However, Sebi has said that all intermediate pooling will stop from April 1.

From July, funds should be credited directly from the investors’ account into the mutual fund scheme account without any intermediate pooling. Portfolio managers registered with Sebi have been exempted from this new rule.


"On examination of the representation of AMFI, in the interest of the investors, it has been decided to extend the date of applicability of “Circulars” including the clauses relating to 2FA for redemption and source account verification to July 01, 2022," the Sebi circular said.

Sebi also clarified that on or after July 01, 2022, new mandates shall be accepted only in favour of SEBI recognized Clearing Corporations and those mandates shall exclusively be for subscriptions to units of Mutual Fund schemes and not for any other purpose.

Earlier, Sebi said it observed that a few platforms pool the client's funds into a nodal account and subsequently transfer to fund houses either on per transaction basis or lumpsum basis. Sebi said fund houses can execute transactions either financial or non-financial only if there is a service agreement between them and the service provider.

Distributors and investment advisers facilitating transactions cannot accept payment through one-time mandates or instruments in their name. Also, cheque payments from investors should be in favour of the respective mutual fund scheme.