eWallets Can Be Now Used For Purchasing Mutual Funds; SEBI In Talks With RBI For Promoting Cashless Investments


Ewallet Digital Wallet Cashless Payments

The Securities and Exchange Board of India (SEBI) wants to hit two birds with a single stone this time. In case RBI allows investors to purchase mutual funds using digital wallets, then SEBI would be successful in accomplishing two objectives: a) Promote mutual funds investments b) Encourage cashless transactions so that black money is trailed and curbed.

SEBI and RBI are holding talks to enable purchasing of mutual funds via e-wallets, and regulations regarding the same would be soon announced.

Considering that ecommerce portals such as Flipkart and Amazon would be soon allowed to sell mutual funds via their ecommerce portals, the move to allow digital wallets to do the same seems a logical extension. As per a person familiar with the development, the likelihood of a person visiting ecommerce portals daily is more, hence, allowing them to sell mutual funds makes sense.

And now, the same logic is being implemented for selling mutual funds via digital wallets as well.

The Current Limitations

SEBI and RBI are right now planning to introduce massive changes in rules for operating digital wallets. For example, for all transactions above Rs 10,000 and less than Rs 1,00,000, a KYC (Know Your Customer) process is mandated for digital wallet users.

Now, digital wallet companies are not allowed to conduct KYC, hence, they stop all transactions above Rs 1 lakh. The catch here is that, all mutual fund transactions, be it Rs 100 or Rs 1 lakh, needs KYC as a mandatory requirement.

SEBI wants a mechanism wherein digital wallet users are able to seamlessly invest in mutual funds, without hassles of paper-work and repeated KYC process.

Money laundering is another major issue which is holding the gates for this revolutionary idea. As per reports, SEBI can impose a cap on the amount which can be invested for buying mutual funds using eWallets.

Advantage: Digital Wallets

The biggest advantage of allowing digital wallets to be used as investment tools for mutual funds is promoting cashless economy, which is the ambition of present Govt.

Money invested using digital wallets can be tracked, and flow of black money can be easily stopped.

Besides, Govt. has not allowed digital wallet firms to give any interest on the money parked within the wallets; in case investment is allowed, then customers can get some nice returns as well.

As of now, out of 120 crore Indians, there are only 4 crore portfolios in mutual funds (as of 2015), and as of 2014, only 10% of Indian households had ever invested in any form of investment scheme (shares, mutual funds etc)

Talks are still in a preliminary stage, but allowing digital wallets to turn into investment platforms is an excellent move by SEBI as it will certainly encourage more investment into the financial market.

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