SEBI issued this guideline, Investors in Mutual Funds should be careful

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On Friday SEBI reduced the deadline for asset management companies (AMCs) to transfer dividend of mutual fund unitholders and proceeds of units sold. The Securities and Exchange Board of India (SEBI) has said that under the new rule, now the payment of dividend has been reduced from the existing 15 working days to seven days.

SEBI has said that the public record date in case of dividend payment shall be two working days from the issue of public notice, wherever applicable. SEBI said, “The dividend will be paid to the unit holders within seven working days from the record date.” Also, the timeline for transfer of unit sale proceeds has been reduced to three working days from the existing 10 working days.

Special care should be taken in this situation

SEBI further said that the proceeds of sale of units shall be made available to the unit holders (investors) within three days from the date of sale of units. Schemes in which at least 80 percent of the total assets are invested in approved investment products abroad, in which case the proceeds of unit sale shall be made available to the unit holders within five working days from the date of application. Will go

Interest will be given at the rate of 15 percent

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Industry body Association of Mutual Funds in India (AMFI), in consultation with SEBI, will publish a list of exceptional circumstances due to which they will be unable to pay redeemed amounts to investors within the stipulated time frame. Also, they will have to tell how long it will take for the unit holders to get the money in such a situation.

The list will be published within 30 days. The regulator said that if there is a delay in the amount received from selling units or in dividend payment, then the unit holders will get interest at the rate of 15 percent per annum on the amount received. The interest will be paid by the asset management companies and the details of such payments will have to be reported to SEBI under the compliance report.

Every mutual fund and asset management company will be required to make dividend payment to unit holders and transfer the redemption or buyback proceeds of units within a period specified by SEBI. If the encashed amount is not transferred within the stipulated period, the concerned Asset Management Company (AMC) will have to pay interest as per the delay. Sebi said, “Action can be taken against the AMC for this delay, despite payment of interest on account of delay in transfer of dividend or unit sale proceeds to the unit holders.”

It further said that buyback (sale of units to mutual funds) or dividend payment will be sent in physical form only in exceptional circumstances and the AMC will be required to maintain records along with reasons for all such cases of physical dispatch. SEBI has amended the mutual fund rules for this.

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