SEBI Proposes Allowing Payroll Linked Investment in Mutual Funds Through Salary Deductions
Like PF and NPS, SEBI has proposed allowing payroll linked mutual funds investment via salary deduction. In a consultation document released on Wednesday, the Securities and Exchange Board of India has suggested relaxing regulations governing third party payments in mutual funds, such as permitting companies to invest via wage deductions, according to the reports.
The plan may permit employers to utilize a wage deduction method to invest in mutual funds on behalf of their workers. The income reduction method will remain optional and need the consent of the workforce, according to SEBI.
According to the draft document, the facility would only be accessible to listed corporations, businesses registered with the EPFO and asset management companies (AMCs). The investments will still be made in the employee’s name and in order to participate in the arrangement, employees will have to actively opt in.
Furthermore, investors may be permitted to contribute a portion of their mutual fund investments. The contributions would be sent to verified charities through mutual funds.
In addition, the regulator has suggested allowing mutual fund distributors to accept commissions in the form of mutual fund units. The plan states that mutual fund commission payments are intended to promote long term investment, as highlighted by the reports.
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