2024-08-02 01:16:51
New Delhi: Market regulator SEBI is soon going to reduce the minimum amount for investing in mutual funds through SIP from Rs 500 to Rs 250. SEBI Chairperson Madhabi Puri Buch said that the regulator will not allow ‘contamination like Paytm’ in it. It will follow strict KYC rules for investment. A large number of people in the country invest through Systematic Investment Plan i.e. SIP. Mutual fund schemes collect money from people and invest it in debt and equity markets. With this, people are able to invest money in big companies of the country as well as medium and small companies with small savings. SEBI Chairperson Madhabi Puri Buch said that the regulator will soon consider the proposal to reduce the minimum amount for investing in mutual funds through SIP from Rs 500 to Rs 250. This step is being taken to make investment more accessible.
Strict KYC rules will be followed
Buch said that SEBI will not allow ‘contamination like Paytm’ and will follow strict KYC rules for investment. According to him, ‘We will not allow ‘contamination like Paytm’.’ KYC i.e. ‘Know Your Customer’ is a process through which financial institutions collect information about the identity of their customers and their transactions.
Buch said that SEBI will soon send a proposal to its board to create a system like ASBA for the secondary market. This system will be mandatory. It will be provided by selected brokers. ASBA (Application Supported by Blocked Amount) is a system in which the IPO application amount is blocked in the applicant’s bank account. Then the shares are released only when allotted.
Advisory on finfluencers soon
In January, SEBI had set up this system on a voluntary basis, giving brokers time to adapt. Last January, banking regulator RBI had ordered Paytm Payments Bank to suspend most of its operations. The bank was found violating KYC requirements on several occasions and despite regulatory warnings.
SEBI also said that the ASBA settlement mechanism was available for the secondary market on a voluntary basis for some time. It is time to make it mandatory for select brokers. Under ASBA in the primary market, the IPO application amount is blocked in the applicant’s bank account. It is released only when the shares are allotted.
Buch also said that the regulator will soon issue an advisory aimed at eliminating the negative impact of finfluencers on investors.