Investors without
Permanent Account Number (PAN) can now
(May 2014) put as much as Rs. 50,000 in mutual funds (MFs) in cash every
year.
SEBI on Thursday said
it was increasing the limit for cash investments to Rs. 50,000 from Rs. 20,000.
The move is aimed at helping MFs sell
products in small towns & rural areas, where transactions happen in cash
rather than through banks.
SEBI has been pushing
MFs to spread to towns outside the top15 cities. Some large MF houses made a
representation to SEBI that raising the cash limit would help them tap the
smaller towns.
The SEB's move will
benefit only few AMCs (asset management
companies) as majority of the industry still prefer investors with a PAN and
bank account.
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