I applied for a Systematic Investment Plan (SIP) in a fund with Either or Survivor Mode. First Name in the application was of my spouse and second name was mine. I submitted a cancelled cheque of bank account of my spouse for redemption. Further, as I desired auto debit to take place from my single mode bank account, I submitted Auto debit form with my single mode bank details along with cheque of SIP amount from my bank. The fund house is treating it as third party payment and saying it will be rejected. or asking to submit cheque of a joint Bank Account. But another fund has started SIP in a similar situation. Please guide and also provide a copy of guidelines by AMFI/SEBI in this regard. As per my knowledge 1. In case of payments from a joint bank account, one of the joint holders of the bank account must be the first account holder under the investment application. 2. In case of payments from a single mode bank account, one of the joint holders of the folio must be the sole account holder in Bank . Please clarify.
- Dev Kant
Since you haven't given the name of the fund houses, we won't be able to comment on these specific instances.
However, way back in 2010, Association of Mutual Funds in India (AMFI) has asked fund houses not to accept third party payments, barring a few exceptions. AMFI had said that third-party payments would only be accepted in case of payment by "parents/gand-parents/related persons on behalf of a minor for a value not exceeding ₹50,000 (each regular purchase or per SIP installment); payment by employer on behalf of employee under systematic investment plans (SIP) through payroll deductions and custodian on behalf of an FII or a client. Here is a link to the story from our archives: AMCs Not to Accept Third-party Payments.
When payment is made through instruments issued from an account other than that of the applicant investor, such payment is referred to as "third party payment." In case of payments from a joint bank account, the first holder of the mutual fund folio has to be one of the joint holders of the bank account from which the payment is made.
This article was originally published on December 21, 2015.
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