In a bid to channelise household savings into capital markets and promote digitisation in investment instruments, regulator Securities and Exchange Board of India (SEBI) has allowed investing in mutual funds through digital wallets.
At its board meeting on Wednesday, the first under newly-appointed chairperson Ajay Tyagi, SEBI said mutual fund houses can now allow retail individual investors to invest up to Rs 50,000 or 90% of the folio value, whichever is lower, per financial year through the digital wallet route. However, such investments can be redeemed only to the bank account of the unitholder.
The e-wallet facility comes at a time when mutual fund inflows in India are at a record high. Investors pumped in a record Rs 3.43 trillion into mutual funds in FY2017, mainly income, liquid, and equity schemes. Equity and equity-linked schemes saw inflows of more than Rs 70,000 crore.
The rising inflows in equity schemes are in tandem with the recent rise in equity markets. Benchmark equity indices on Wednesday touched record highs, reflecting the strong trend in global equities.
Through the move, SEBI is looking to popularize mutual fund investments among young, tech-savvy investors, apart from furthering the government’s objective of facilitating cashless financial transactions.
However, it has clarified that mutual fund houses will not be allowed to lend or borrow money by use of such facility. It has also disallowed e-wallet service providers from offering any incentives, including cashback benefits.
“E-wallet issuers must not offer any incentive such as cashback etc., directly or indirectly for investing in mutual fund scheme through them. E-wallet’s balance loaded through cash or debit card or netbanking, can only be used for subscription to mutual funds schemes and balance loaded through credit card, cash back, promotional scheme etc. should not be allowed for subscription to MF schemes,” SEBI said.