SEBI Allows Cash Investments of Up to Rs. 50000 in MF

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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