SEBI to allow mutual funds purchases via digital wallet

Will cashless and hassle free transactions rule the world of mutual funds? Maybe yes, SEBI (Securities and Exchange Board of India) is holding talks with RBI (Reserve Bank of India) to allow the use of e-wallet/ digital wallet for purchasing mutual funds. Both the capital markets regulator and financial giant are yet to frame the regulations for digital wallet use.

Drawbacks in the current system:

According to the RBI norms, customers can use online e-wallet without KYC for transactions up to 10,000 INR and transactions above 10,000-1 lakh; KYC is mandatory. E-wallet is not applicable for purchases above 1 lakh. But all mutual fund transactions need KYC as a mandatory requirement.

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The reason why SEBI wants the involvement of digital wallet is to promote all the investors to take up the hassle less and paper free KYC procedures. This can be done using the digital wallet, in case the RBI allows. This can help to meet two demands that SEBI presently have

  • Increase mutual fund investments
  • Reduce money laundering via cashless transaction.

Current developments:

SEBI is all set to sell the mutual funds through online marketplaces like Flipkart and Amazon.in. According to the person familiar with the developments, the number of customers visiting the e-commerce portals is increasing on daily basis. Hence, the above step will be justifiable.

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Advantages of digital wallet:

The use of the digital wallet for mutual fund purchase not only promotes cashless transactions but also helps in curbing the black money circulation. The money stagnant in the digital wallet is currently not earning any interest rates, but if the investment is allowed, customers can benefit from the lucrative returns. The simple transaction procedures can attract people in all the fields to invest in mutual funds and the financial markets.

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