The Securities and Exchange Board of India (SEBI) on Friday introduced a voluntary debit freeze facility for mutual fund investors across both demat and non-demat folios, a move aimed at promoting digital security.
The decision, taken after consultation with the Association of Mutual Funds in India (AMFI), will come into effect from 30 April 2026, the markets regulator said in a statement.
“It is decided that a voluntary debit freeze facility be introduced for mutual fund investors across demat and non-demat (i.e. Statement of Account) folios to ensure that no units shall be debited from such folios till the time they are unlocked,” SEBI said.
How does the new framework work?
Under the facility, investors would be able to lock their mutual fund folios, ensuring that no units are debited from their accounts until the folios are unlocked, the markets regulator said in a circular.
In the first phase, the facility to lock the folio will be provided to mutual fund investors by Registrar and Transfer Agent (RTAs) through the interoperable platform MF Central.
The facility will only be available to KYC-compliant investors who have a valid email ID and mobile number, both of which are mandatory.
MF Central was introduced to improve and streamline the overall investor experience, the regulator stated.
AMFI to prescribe process to AMCs
Industry body AMFI will prescribe the detailed process for locking and unlocking folios to all asset management companies (AMCs) and RTAs and will also provide the processes to be followed by different types of investors after consulting with the regulator.
Additionally, AMFI has been directed to prescribe a detailed list of financial and non-financial transactions that are allowed during such a lock-in period to AMCs/ RTAs.
The detailed process to opt for such a facility and its impact on different financial and non-financial transactions during the lock-in period will be disclosed by all AMCs/RTAs on their websites and in the statement of additional information.
Sebi moves to boost investor protection
Of late, the market regulator has been actively taking measures to strengthen investor protection. Last month, it had directed all regulated entities and their agents to disclose their registered name and registration number on social media platforms, tightening transparency norms amid the surge in market-related content online.
In a circular, the market regulator said all intermediaries registered under Section 12 of the Sebi Act, which includes stockbrokers, depository participants, portfolio managers, investment advisers, research analysts, and so on, must comply with new disclosure requirements when posting securities market-related content on social media platforms.
