SEBI, the stock market regulator in India, has asked mutual fund companies to ensure that investors use KYC-compliant online wallets to complete their transactions in the mutual fund space, effective from May 1, 2023. SEBI’s circular states that all e-wallets must be fully compliant with the KYC norms prescribed by the Reserve Bank of India. This recent decision is intended to safeguard the interests of investors in securities and promote the development and regulation of the securities market. It is expected to increase security, increase digitisation in finance, help investment companies manage client data, reduce onboarding expenses for investors, and reduce fraudulent activities in the mutual fund sector.
SEBI’s efforts to curb fraudulent activities in the securities market through measures such as monitoring social media and taking action against fraudulent entities and individuals are important for safeguarding the interests of investors. The recent decision to require KYC-compliant e-wallets for transactions in mutual funds is likely to boost security, increase digitisation, and reduce fraudulent activities in the mutual fund sector. These efforts are particularly relevant given the increased usage of the internet and online media by perpetrators of fraudulent schemes.