AMFI Guidelines pertaining to third part cheques & registration of multiple bank accounts

AMFI has recently come out with guidelines pertaining to third party Cheques and Registration of Multiple Bank Accounts, the implementation of which is to be done w.e.f 15th Nov'10 . The Gist of both the circulars have been placed below. An Addendum to this effect is being released.


I. Third Party Cheques


What is categorised as a Third Party Cheque ? A Third party Cheque would be a payment made through instruments issued from an account other than that of the beneficiary investor. In case of a joint bank account the first holder of the mutual fund folio has to one of the joint holders of the bank account from which payment is made.

Exceptions :Third party cheques would not be accepted except in the below conditions.

• Payments by Partents/Grand PArtents/related persons on behalf of Minor not exceeding Rs. 50,000/-(Lumpsum purchase or per installement in case of SIP).
• Custodian on behalf of an FII or a Client.
• Payment by Employer on behalf of employee under SIP plan through Payroll deduction.
Documents : In case of the exceptional situation as above the following needs to be ensured.
• Mandatory KYC for investor and the person making the payment.
• Declaration from investor and person making payment (Person making payments decalration should carry the relationship with investor and the details of bank account from which funds are being received.)
• Ensuring that Source of funds is from the Drawers account only.

Points to be taken care of at the time of purchase

1. Investor needs to provide the Pay in details during purchase i.e. the (Account from which a subscription payment is made). .
2. Pay in from prefunded instruments like POs/DDs etc should carry a certificate from issuing banker stating Account holders name and Number should accompany the purchase. AMC/RTA would verify that this account is a preregistered pay in account or from the account of the first named holder.
3. Prefunded instrument issued against CAsh shall not be accepted for investment sof Rs. 50,000/- or more. This should be accompanied with Banker Certificate giving name , address and pan of the person who has requested for DD. AMC/RTA to check that the name matches with the first named holder.
4. Payment by way of RTGS/NEFT/ECS/Bank Transfer should be accompanied with a copy of the instruction to the bank stating the account number debited. AMC/RTA would verify that the account number on the instruction copy is a registered pay in account or belonging to the first named unit holder.

(Till the time the changes are carried out in the application forms, a decalration form needs to be used for the 3 exception scenaris mentioned above. Formats of the declarations have been uploaded on the website)



II. Multiple Bank Mandate Registration 

Gist of the circular

1. Bank Mandates would be registered only at a Folio level.
2. Investors would be provide facility to register multiple bank mandates where the investor is one of the holder
3. Registration process :
   1. Multiple Bank Account Registration form to be submitted by investor along with cancelled cheque copy or bank statement /pass book with account number , account holsders name and address
   2. Registration after verifying that the name of unit holder matches with one of the bank account holders
   3. up to 5 mandates for individuals and 10 for non individuals would be registered
4. Default mandate needs to be registerd to which all payouts would happen by default unless specifically mentioned by investor.
5. For existing investor the existing mandate would be treated as default till the investor gives a separate request. For new investors the bank account in the application to be used as default.
6. Investor can delete registered mandates by using the prescribed form, default mandate however can be deleted only after registering an alternate default mandate.
7. Delinking of bank account registration and Redemption -There would be a cooling period of not more than 10 days for validation and registration of bank account. The pocess of validation includes notifying the investor about the registration .
8. Redemption post 15th Nov10 to happen only to a registered bank mandate that has gone through the validation process