Association of Mutual Funds in India (AMFI) issued best practice guidelines on ‘Risk mitigation process against third party cheques in mutual fund subscriptions’. In line with these recommendations Mutual Funds shall not accept applications for subscriptions with third party payment instruments .
What is a Third-Party instrument
· When payment is made through instruments issued from an account other than that of the beneficiary investor, the same is referred to as Third-Party payment.
Exception to the Rule
· Payment by Parents/Grand-Parents/related persons on behalf of a minor in consideration of natural love and affection or as gift for a value not exceeding Rs. 50,000/- (each regular purchase or per SIP installment);
· Payment by employer on behalf of employee under Systematic Investment Plan (SIP) facility through payroll deductions;
· Custodian on behalf of an FII or a Client.
· Payment received from a joint bank account where the first holder of the mutual fund folio is one of the joint holders in the bank account from which payment is made.
Source HDFC Mutual Fund
What is a Third-Party instrument
· When payment is made through instruments issued from an account other than that of the beneficiary investor, the same is referred to as Third-Party payment.
Exception to the Rule
· Payment by Parents/Grand-Parents/related persons on behalf of a minor in consideration of natural love and affection or as gift for a value not exceeding Rs. 50,000/- (each regular purchase or per SIP installment);
· Payment by employer on behalf of employee under Systematic Investment Plan (SIP) facility through payroll deductions;
· Custodian on behalf of an FII or a Client.
· Payment received from a joint bank account where the first holder of the mutual fund folio is one of the joint holders in the bank account from which payment is made.
Source HDFC Mutual Fund
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