SEBI's draft paper proposes easing restrictions on third-party payments in mutual funds under specific scenarios, aiming to provide operational flexibility while ensuring compliance.
Third-Party Payment Flexibility in Mutual Funds
The Securities and Exchange Board of India (SEBI) has issued a draft consultation paper proposing limited relaxation of the existing restrictions on third-party payments in mutual funds. This proposal aims to provide operational flexibility for practices such as payroll deductions and distributor commissions.
Included in the proposal are several safeguards to ensure compliance with Know Your Customer (KYC) norms, audit trails, and adherence to the Prevention of Money Laundering Act (PMLA). These measures are designed to maintain regulatory integrity while adapting to the needs of the industry.
Legal professionals advising asset management companies will need to consider the implications of these proposed changes. Understanding the conditions under which third-party payments can be accepted will be crucial for ensuring compliance and operational efficiency in mutual fund management.
Citations
- SEBI Proposal (2026) SEBI Report
