By: ABP News Bureau | Updated at : 28 Jan 2023 04:14 PM (IST)
From February 1 onwards, equity mutual funds in India will be settled within two days ( Image Source : Getty )
India’s asset management companies (AMCs) will shift to a T+2 redemption payment cycle for equity schemes from February 1, announced the Association of Mutual Funds in India (AMFI) on Friday. T+2 is shorthand for "trade date plus two days".
Up until now, India followed the T+3 settlement system, meaning it took three days for shares and money to be credited to the account. From February 1 onwards, equity mutual funds in India will be settled within two days.
In an announcement on January 27, the Association of Mutual Funds in India (AMFI) said that the move will be implemented uniformly with effect from February 1, 2023, (i.e., for all transactions received before cut off timing on February 1, 2023, and processed at closing NAV for February 1, 2023) after allowing a couple of days for the settlement cycle /process to stabilise.
— AMFI India (@amfiindia) January 27, 2023
The move is termed beneficial for mutual fund investors. It has come just a few days after the equity markets announced that they are moving to a T+1 settlement cycle for all stocks.
Also Read: T+1 Settlement Cycle Comes Into Effect From January 27. What Does It Mean: Explained
Commenting on the development, A Balasubramanian, managing director and chief executive officer, Aditya Birla Mutual Fund and chairman, AMFI, said, “T+1 settlement cycle for Indian equity markets is a global first. As an industry, we want to pass on the benefit to our mutual fund investors and hence we are proactively adopting a T+2 redemption payment cycle for equity funds.”
NS Venkatesh, chief executive, AMFI added “AMFI and its member AMCs always keep investor interest at the forefront. Since the day SEBI announced the phased movement of equity markets to the T+1 settlement cycle, the industry has been preparing to shorten the redemption payment cycle and we are happy to announce the shift to the T+2 redemption payment cycle effective February 1, 2023, onwards.”
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