Sebi tweaks mutual fund investment framework in minors' names via guardians

Capital markets regulator Sebi on Friday tweaked the rules about investment in mutual funds made in the name of a minor through a guardian. The regulator has asked all Asset Management Companies (AMCs) to make the necessary changes to facilitate such mutual fund transactions with effect from June 15, 2023.

Under the new rule, payment for investment in mutual funds by any mode will be accepted from the bank account of the minor, parent or legal guardian of the minor, or a joint account of the minor with parent or legal guardian, Sebi said in a circular.

For existing mutual fund folios, the AMCs will have to insist upon a change of pay-out bank mandate before redemption is processed.


Irrespective of the source of payment for the subscription, all redemption proceeds will be credited only to the verified bank account of the minor, which he or she can hold with the parent/ legal guardian, the Securities and Exchange Board of India (Sebi) said.

In December 2019, Sebi prescribed the uniform process to be followed AMCs in case of investments made in the name of a minor through a guardian.