The Securities and Exchange Board of India (Sebi) has asked the Association of Mutual Funds in India (Amfi) to identify and block mutual fund (MF) distributors who indulge in ‘splitting of transactions’ for higher transaction fees.
MF distributors are allowed to charge clients a transaction fee of Rs 100 to Rs 150 for every lumpsum investment or registration of a systematic investment plan (SIP) if the investment amount is above Rs 10,000.
The markets regulator said it has identified a number of instances when MF distributors have invested clients’ money in mutual funds through more than one application when it could have been done in one go. “Amfi shall take necessary action i.e. blocking of such MF distributors for a period of six months,” Sebi said.
On its part, Amfi has written to registrar and transfer agents — CAMS and KFin Technologies — asking them to share details of MF distributors who indulge in splitting of transactions on a monthly basis from October 2022. The industry body has also asked the RTAs to verify the ‘violators’ data sent by the markets watchdog.
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