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Home>Blog>News>SEBI Discontinues Usage of Pool Accounts for Mutual Fund Transactions

SEBI Discontinues Usage of Pool Accounts for Mutual Fund Transactions

01 April 2022
2 minutes

In a circular dated October 4, 2021, the Securities and Exchange Board of India (SEBI) announced that the usage of pool accounts will be discontinued for mutual fund transactions starting July 1, 2022. 

What are pool accounts?

Pool accounts are wallets with stockbrokers. The pool account/wallet in Groww is known as Groww Balance. The money in your Groww Balance, which is the pool account being referred to, can be used for all your transactions on Groww. However, after this circular comes into force on July 1, you will not be able to use your Groww Balance for your mutual fund transactions. 

SEBI bans pooling of money – What changes for you?

Transactions: If your broker has a wallet/pool account (for example, Groww Balance) you will not be able to use it for mutual fund transactions like lump-sum investment, redemption and SIPs. When you invest in a mutual fund (lump sum or SIP), the money will directly be debited from your bank account and be transferred to the respective AMC. When you redeem, the money will be directly transferred to your bank account and not your wallet.

You can continue to use your Groww Balance amount for all other transactions on Groww: stocks, F&OSGB and other investment products.

Lump sum: You will have to make the payment using the payment gateway. Once the transaction is successful, the amount will be deducted from your bank account and transferred to BSE. 

SIP: Your SIPs can no longer be paid using Groww Balance. You will have to now use the payment gateway to complete the payment so that money is directly debited from your bank account. In case you were using your Groww Balance for your SIP mandate and you do not change it before April 1, your SIP instalments will start failing. 

You can view these SIP instalments on your dashboard under Pending SIP Payments section. 

Redemption Orders: Currently, you have the option of redeeming the amount to your Groww Balance, instead of their bank accounts. However, from April 1 onwards, you will only be able to redeem the investments directly into your bank account. If you wish to re-invest, the money will be debited from your bank account directly and not via Groww Balance.

What else does the circular say?

SEBI has directed all related entities: Stock Exchanges,  Depositories, AMCs, RTAs, and others involved in mutual fund transactions to ensure that information regarding this circular is effectively communicated to all important stakeholders, such as investors, stockbrokers, payment banks and commercial banks. 

AMFI and stock exchanges have been directed to issue guidelines to mutual fund companies and clearing members/stockbrokers respectively.

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