SEBI Restricts Usage Of Pool Accounts (Groww Balance) For Mutual Fund Transactions

01 July 2022
2 min read

SEBI Restricts Usage Of Pool Accounts (Groww Balance) For Mutual Fund Transactions

The Securities and Exchange Board of India (SEBI) has announced through a circular that the usage of pool accounts will be discontinued for mutual fund transactions starting July 1, 2022. 

What are pool accounts?

Pool accounts are where you store money with stockbrokers. For example, Groww Balance is a pool account. This is different from a bank account. The amount in your Groww Balance can currently be used for all your transactions on Groww. 

However, after this circular comes into effect on July 1, you will not be able to use your Groww Balance for mutual fund transactions. 

What changes for you?

Transactions: Starting July 1, Groww balance will be restricted for Mutual Fund transactions like one-time investments, redemptions, and SIPs.

You can continue to use your Groww Balance amount for all other products on Groww such as stocks, F&O, SGB, and others.

One-time investment: Amount available in Groww Balance cannot be used for purchasing mutual funds. You can use UPI or Netbanking to pay at the time of placing orders. 

SIP: When starting a new SIP, you can pay for the order using UPI or netbanking.

For further SIP installments, if you have an autopay set up, the amount will be deducted from your bank account automatically. In case you do not have it already, we recommend you to set up autopay by clicking here

In case your Autopay is not approved in time for your next SIP installment, you can still pay for your installment using UPI or Netbanking.

To view all SIP installments that are due for payment, you can go to your dashboard and directly pay for those installments from there. To read more about how to pay for your SIP installments in case your autopay is not set up or if the autopay deduction fails, click here.

Redemption Orders: Amount from your redemptions will now be directly transferred to your bank account. You will not be able to redeem funds into your Groww Balance.

OTP Verification: From July 1st, whenever you place a redeem, switch, STP, or SWP order, an OTP verification will now be required to process the order. The OTP will be sent to your email and phone number that are linked to the fund. 

The order will be processed further by the fund house after the OTP is verified successfully. 

Click here to know more about the OTP verification process.

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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