Asset management companies are set to move to a shorter redemption payment cycle of T+2 for equity schemes from Wednesday.
At present, funds are transferred to investors’ bank account within 3 days after the completion of the redemption process.
Moving to the T+2 cycle for equity schemes will benefit mutual fund investors.
Akhil Chaturvedi, Chief Business Officer of Motilal Oswal AMC, termed the move as a positive step that will give quick and easy liquidity, which can be used to plan re-investment or meet any obligations in a more time-bound manner.
From January 27, Indian equity markets moved to a T+1 settlement cycle for all stocks, shortening the settlement cycle by a day and making the availability of funds a day sooner.
To pass on this benefit to mutual fund investors, Association of Mutual Funds on Friday said that all asset management companies will move to the T+2 redemption payment cycle for equity schemes, and implement this uniformly with effect from February 1, 2023.
Globally, most stock exchanges in developed as well as emerging markets follow the T+2 (trade plus two) settlement system.
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, AMFI Chief Executive NS Venkatesh said earlier.
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)