In order to further safeguard interest of investors, capital markets regulator Sebi on Friday decided to extend the two-factor authentication for subscription transactions in units of mutual funds.
The new framework will come into effect from April 1, 2023, the Securities and Exchange Board of India (Sebi) said in a circular.
At present, all asset management companies (AMCs) are required to authenticate redemption transactions using two-factor authentication for online transactions and signature method for offline transactions.
"It has now been decided to extend the Two-Factor Authentication for subscription transactions in the units of mutual funds as well," Sebi said.
In case of subscription and redemption of units, two-factor authentication (for online transactions) and signature method (for offline transactions) will be used for authentication.
One of the factors for such authentication for non-demat transactions will be a one-time password sent to the unit holder at his/her email or phone number registered with the AMC.
In case of demat transactions, the process of two-factor authentication as laid down by the depositories will be followed.
Sebi has clarified that in case of systematic transactions, the requirement of such authentication will be applicable only at the time of registration.
Also read: SEBI chief offers a checklist on how fintech companies can prevent crackdown by the regulator
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