SEBI has proposed to relax third-party payment restrictions for mutual funds under specific conditions, aiming to boost operational flexibility while ensuring compliance safeguards.
Proposal for Third-Party Payments in Mutual Funds
The Securities and Exchange Board of India (SEBI) has introduced a draft consultation paper proposing limited relaxation of third-party payment restrictions applicable to mutual funds. The amendments are geared towards enhancing operational flexibility, particularly in scenarios such as payroll deductions and distributor commissions.
As part of the proposed changes, SEBI emphasizes the need for strict adherence to KYC norms, audit trails, and compliance with the Prevention of Money Laundering Act (PMLA) to ensure that the integrity of the mutual fund ecosystem is maintained.
“These proposals aim to facilitate smoother transactions while retaining necessary compliance frameworks,”
This initiative offers a more accommodating operational landscape for mutual fund operators and investors alike. Legal practitioners should prepare to navigate potential changes in compliance requirements and client advisories as these proposals develop.
Citations
- SEBI (2026) Consultation Paper on PPP
