Zerodha users can’t use funds in trading account to buy mutual funds. Here’s why

Starting at the moment, Securities and Exchange Board of India (SEBI) has disallowed the use of funds in trading account for investing in mutual funds (MFs). Therefore, there was problem with mutual fund transactions on Zerodha’s Coin app.

“We depend on BSE StAR MF to energy transactions on Coin and BSE made the system to course of funds and transactions primarily based on the brand new rules yesterday. But we’re at present dealing with important points with processing Coin transactions due to points with the BSE StAR MF platform. We are in contact with BSE to have the problems resolved on the earliest. We remorse the inconvenience brought on,” said the online brokerage firm.

If you have made the payments for your AMC SIP through the payment link shared by BSE then you need not make the payment again from Coin, Zerodha further said. “Your orders will be processed today. However, for future transactions please make the payments through the Coin app and ignore any emails sent by BSE. SIPs scheduled today will not be triggered,” it added. The dealer later mentioned that buy orders are blocked now due to a problem with BSE StAR MF and Razorpay, nevertheless, redemption orders are allowed.

“Funds in the Zerodha account can’t be used for mutual fund investments beginning July 1, 2022. Funds for mutual fund purchases have to transferred from the first financial institution account linked with Zerodha to ICCL,” said the online brokerage firm in an FAQ, adding that the redemption proceeds will also be credited to investor’s primary bank account.

The new payment flow on the Coin app is as follows: Payment can be made through UPI for orders less than 2 lakh, through netbanking for orders more than 2 lakh and NEFT or RTGS have payment modes have to be used for orders above 1 crore, it added.

Until now, whenever investments were made in mutual funds, the money would be deducted from the investor’s trading account just like stocks. But, from today, pooling of funds and/or units by stock brokers in any form or manner shall be discontinued for mutual fund transactions.

The money has to go from the investor’s bank account to the bank account of the mutual fund house, as mandated by Securities and Exchange Board of India (SEBI) as all transaction platforms backed by stock exchanges will implement this.

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