Sebi backs MF buy via e-wallets

Mumbai, Dec. 5: The Securities and Exchange Board of India is planning to allow investors to buy mutual funds through digital wallets.

Following the demonetisation of Rs 500 and Rs 1,000 notes, the government, the RBI, banks and other entities have been encouraging cashless transactions.

Sebi has indicated its willingness to allow people to buy mutual funds from online market places.

Quoting sources, PTI said payment through e-wallets was expected to result in speedier and easier transactions, while reducing failures because of payment gateway issues.

The regulator has set up a committee under Infosys co-founder Nandan Nilekani to find ways in which electronic means can be used better for the sale of mutual funds.

Sebi maintains that a greater use of the internet as a distribution channel can help to increase the penetration of mutual funds and bring down the cost of buying these schemes.

At present, 43 active asset management companies together manage assets worth around Rs 16.8 lakh crore and mutual fund investors' account stands at over 5 crore.

The maximum amount of money a user can store per month in digital wallets is Rs 20,000 against Rs 10,000 earlier. The RBI, last month, doubled the limit in view of the cash crunch, following demonetisation.

Last month, the RBI in a notification said the limit of semi-closed prepaid instruments (PPIs) issued with minimum (KYC) details had been raised to Rs 20,000.

Semi-closed PPIs do not permit cash withdrawal or redemptions by the holder.

Securities and Exchange Board of India ( SEBI )