SEBI makes it compulsory for the Mutual fund to pay dividend to investors within 7 days from record date
The Mutual fund regulator Securities & Exchange Board of India (SEBI) has issued a circular on 25 November 2022 directing the mutual fund houses to pay the dividends within seven working days from the record date. Earlier they had to pay the amount within 10 working days to the investor. Dividend is the part of profit earned by the mutual fund which is distributed amongst the unit holders of the mutual fund.
Record date for receiving dividend
SEBI has also directed that the record date should be two working days from the date of a public notice, for the purpose of payment of dividend. Record date is the date which is set by the mutual funds that determines which unit holders are eligible to receive the dividends.
In case of redemption or repurchase of units, the fund houses are told to pay out the proceeds within three working days.
Mutual Fund which invest in foreign assets
In the case of schemes investing at least 80 percent of the money in securities overseas, upon such redemption or repurchase, the investors should be paid within five working days from the date of redemption. Redemption means the investors sell back the units it holds of a mutual fund scheme back to the mutual fund’s Asset Management Company.
Penalty on the Mutual Funds
If the fund house fails to pay dividend or redemption or repurchase pay out within the stipulated time period then the fund house is liable to pay interest at the rate of 15 percent per annum along with the pay out of dividend or redemption.
SEBI chairman : Madhabi Puri Buch
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