The Securities Exchange Board of India (SEBI) on September 30, 2022, issued a notification on Two-Factor Authentication for transactions in units of Mutual Funds.
SEBI Circular No. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2021/634 dated October 04, 2021, introduced various measures to prevent third-party payments and to safeguard the interest of unitholders.
In order to further safeguard the interest of investors, it has now been decided to extend the Two-Factor Authentication for subscription transactions in the units of Mutual Funds as well. Accordingly, Clause 4.4 of the SEBI Circular no. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2021/634 dated October 4, 2021, as modified vide the SEBI Circular No. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2022/29dated March 15, 2022, stands modified.
AMFI’s best practice guidelines issued for AMCs with regard to Two-Factor authentication for redemption transactions of Mutual Funds shall be revised suitably to include subscription transactions of Mutual Funds. It shall be mandatory for all AMCs to follow such guidelines.
Based on discussions with stakeholders, it has been decided that this Circular's provisions shall be applicable from April 01, 2023.
The AMCs, AMFI, recognized Stock Exchanges, Depositories, recognized Clearing Corporations, and Registrar to an Issue and Share Transfer Agents shall take necessary steps for implementing the circular, including putting required processes and systems in place to ensure compliance with the provisions of this circular.
AMFI shall furnish by October 14, 2022, the activity-wise schedule for implementation so as to ensure compliance with para 2 above.
AMFI shall also deliver a progress report on the implementation of provisions of this circular to SEBI on a bi-monthly basis, starting from December 01, 2022.
[Notification No. SEBI/HO/IMD/IMD-IDOF1/P/CIR/2022/132]
