In its recent circular, the capital markets regulator SEBI said that E-wallets used for investing in mutual funds should be compliant with KYC norms prescribed by the Reserve Bank of India (RBI). The circular will be effective from May 1, 2023.

In the year 2017, SEBI via its circular dated May 8,  2017, allowed the use of e-wallets for investment in mutual funds within the umbrella limit of Rs 50,000 for investments by investors, especially the young generation — to purchase these instruments through both e-wallet and/or cash per mutual fund per financial year.

Mutual funds are investment vehicles made up of a pool of funds collected from several investors. The funds are invested in stocks, bonds and money market instruments, among others.

This was in an attempt to promote digital payments in the mutual fund industry and channelise household savings into the capital market. The circular aims to protect the interests of investors in securities and to promote the development and regulate the securities market, said SEBI.