SEBI has issued a draft proposal for limited relaxations on third-party payment restrictions in mutual funds, including specific scenarios that require added safeguards for compliance.
SEBI Proposes Third-Party Payments Flexibility for Mutual Funds
The Securities and Exchange Board of India (SEBI) has released a draft consultation paper that proposes the relaxation of third-party payment restrictions in mutual funds under designated circumstances, such as payroll deductions and distributor commissions. The proposal includes essential safeguards to ensure compliance with Know Your Customer (KYC), audit trails, and the Prevention of Money Laundering Act (PMLA).
This initiative is geared towards providing operational flexibility to the mutual fund industry while still maintaining stringent compliance standards. If adopted, the proposed changes may revolutionize the way mutual funds handle payments and enhance the overall investor experience.
Legal practitioners should prepare to advise clients on compliance implications concerning third-party payments. Adhering to the refined regulations will be essential for mutual funds looking to optimize their operations without compromising regulatory obligations.
Citations
- SEBI Proposal (2026) Third-Party Payments
