Mutual funds ask investors to change Yes Bank account mandate

Mumbai: The mutual fund (MF) industry has stepped in to help investors who had linked their Yes Bank accounts for payment and receipt of funds with regards to their investments with the fund houses. The industry as a whole has suspended crediting all Yes Bank accounts in case of redemptions and dividend payouts.

MFs have also stopped all systematic investment plan (SIP) mandates from investors that were to come from Yes Bank accounts till an alternative account is provided, Association of Mutual Funds in India (Amfi) chairman Nilesh Shah said.

These decisions were taken by the fund houses soon after the RBI imposed restrictions on the private lender on Thursday evening. “All of us didn’t pay money to Yes Bank accounts for redemptions. We were able to allot NAVs against money collected from Yes Bank till Thursday. But for future SIPs, since money won’t come from Yes Bank, we won’t be able to give them NAVs,” Shah said.


NAV, or net asset value, is the price of each unit of an MF scheme at which an investor can either invest in the fund or redeem holdings. Although Sebi rules allow MFs to accept cash investments in their schemes for up to Rs 50,000 per year, given the extra administrative hassles for such inflows, all fund houses insist on investments either through cheques or electronic payments.

An email to investors from PPFAS MF said that all purchase transactions including SIPs involving Yes Bank have been disallowed for a temporary period (one to three months) from Friday and it may also be extended further. Or, “in case of any relaxation by the RBI, we may start processing SIP transaction as well as purchase transaction”. The fund house asked its investors to route all purchase transactions through a new bank account immediately, as this would help “in minimising the dislocation in SIP programme”.

PPFAS MF also said it was withholding all payments to Yes Bank account holders from its funds for the time being and asked its investors to provide a “change of bank mandate” for all future redemptions.