Next time you are investing in mutual funds, make sure you issue a cheque from your own bank account, as fund houses will soon start rejecting third-party payments.
The move is part of efforts to check fraudulent activities by mutual fund agents and distributors, some of whom have been found to be collecting cheques from investors and depositing them for investments in their own names.
After receiving several such complaints against agents and distributors, fund houses have decided not to accept third-party cheques for mutual fund investments with effect from November 15.
"In order to protect the interest of the investors, AMFI has issued best practice guidelines to all AMCs advising them not to accept third party cheques in respect of Mutual Fund Investments (with a few exceptions) effective from November 15, 2010," industry body Association of Mutual Funds in India (AMFI) said in a circular to all the fund houses.
The exceptions include payments by "parents/grand-parents /related persons on behalf of a minor for a value not exceeding Rs 50,000, payment by employer on behalf of employee under systematic investment plans (SIP) through payroll deductions and a custodian on behalf of an FII or a client."
To further identify cases of third-party payments, the fund houses would ask investors for details of bank accounts linked to mutual fund investments and get a certificate from the bank for payments through instruments like pay orders, demand drafts and banker's cheques.
Source - Sify.com
1 comment:
Why not stop Life Insurance Companies third party Cheque.?
This move is part of efforts to check fraudulent activities by mutual fund agents and distributors, some of whom have been found to be collecting cheques from investors and depositing them for investments in their own names.this is so many fraudulent activities possibilities in Life Insurance Companies also, so why not same rule immediate effect for Insurance Companies.?
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