SEBI issued a draft proposing limited relaxations on third-party payments in mutual funds, including compliance safeguards to enhance operational flexibility.
Third-Party Payment Proposal in Mutual Funds
The Securities and Exchange Board of India (SEBI) has issued a draft consultation paper proposing limited relaxation of existing restrictions on third-party payments within mutual funds. This proposal specifically looks to accommodate scenarios such as payroll deductions and distributor commissions.
The proposals include various compliance safeguards aimed at ensuring Know Your Customer (KYC) adherence, maintaining audit trails, and satisfying the provisions of the Prevention of Money Laundering Act (PMLA). This move reflects SEBI's intent to enhance operational flexibility while still prioritizing investor protection and regulatory compliance.
For practitioners, the proposed changes emphasize the need to stay vigilant regarding compliance requirements when processing third-party payments. Understanding and implementing the safeguards will be vital for ensuring adherence to new operational norms and maintaining regulatory standards.
Citations
- SEBI Draft No. Payments/2026/01
