Next time you are investing in mutual funds, make sure you issue a cheque from your own bank account, as fund houses will soon start rejecting third-party payments.
The move is part of efforts to check fraudulent activities by agents and distributors, some of whom have been found to be collecting cheques from investors and depositing them in their own names.
After receiving several such complaints against agents and distributors, fund houses have decided not to accept third-party cheques for mutual fund investments with effect from November 15.
“In order to protect the interest of the investors, AMFI has issued best practice guidelines to all AMCs advising them not to accept third party cheques in respect of Mutual Fund Investments (with a few exceptions) effective from November 15, 2010,” industry body Association of Mutual Funds in India (AMFI) said in a circular.