In its latest circulars SEBI has issued rules for investment done on behalf of/by minors. Here are the new rules:

  1. SEBI has directed mutual fund houses to accept payments only from the bank account of the minor or from a joint account of the minor with the guardian. Cheques, demand drafts, etc would be accepted only from the mentioned bank accounts.
  2. SEBI has issued in its circular that AMCs should make sure when the minor, in whose name investment was made, turns 18, he/she shall be required to provide all the KYC details. The minor shall not be allowed to make any transactions in the capacity of a minor after attaining majority.
  3. To improve the processing time for transmission requests, AMCs have been directed to implement image-based processing wherever the claimant is a nominee or a joint holder in the investor folio.
  4. Sebi has asked AMCs to not accept any redemption request from a claimant pending completion of the transmission of units in his / her favor.
  5. SEBI has also directed AMCs to set up a system control at the account settlement stage of Systematic Investment Plan (SIP), Systematic Transfer Plan (STP) and Systematic Withdrawal Plan (SWP) based on which, the standing instruction is suspended when the minor attains majority, till the status is changed to major.