New SEBI Rule to allow Parents to Invest in Mutual Funds for Children

Starting June 15, parents or legal guardians can invest in mutual fund schemes for their children using their own bank accounts.

The Securities and Exchange Board of India (SEBI) has revised its 2019 circular to streamline the investment process for minors.

Previously, SEBI only allowed payments for investment from the minor's bank account or a joint account with the guardian.

Under the new rule, payments for mutual fund investments can be made from the bank account of the minor, parent or legal guardian, or a joint account.

Opening joint accounts or separate accounts for minor children is no longer necessary for investing in mutual funds.

For existing mutual fund folios, AMCs (Asset Management Companies) will require a change of pay-out bank mandate before redemption is processed.

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