RBI allows UCBs to undertake selling of MFs
Mumbai, Apr 13 (UNI) The Reserve Bank of India (RBI) has allowed the Urban Cooperative Banks (UCBs) to enter into agreement with the Asset Management Companies (AMCs)for sale of Mutual Fund products.
While allowing primary co-operative banks registered in states and which have signed memorandum of understandings (MoU)to enter into agreements with mutual funds for marketing their units, the Apex bank has, however, imposed certain conditions to be followed by them while indulging in this activity.
The Reserve Bank has clearly stipulated that the customer shall bear the risk while purchasing mutual fund units and that the banks will not guarantee any assured returns on the units purchased.
''The banks shall act as an agent of the customers, forwarding the investors' application for purchase or sale of MF units to the mutual fund or the registrar or transfer agents,'' said a RBI release.
The banks will also not be allowed to acquire such units of mutual funds from the secondary market nor will they be permitted to buy back units from customers.
The Reserve Bank has also said that retailing of the units ''may be confined to certain selected branches of the banks'' in order to ensure better control while simultaneously emphasising the necessity for the banks to adhere to know your customer (KYC) and anti-money laundering (AML) norms in respect of the applicants.
The release further said that banks holding custody of MF units on behalf of their customers should ensure that their own investments, where permitted, and investments belonging to their customers are kept distinct from each other.
The Apex bank further stipulated that the banks must also report the details of the tie-up together with a copy of the agreement entered into with the concerned Mutual Fund, to the respective regional offices of the Reserve Bank within a period of ten days from the date of entering into the arrangement.
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