Reserve Bank today relaxed norms for distribution of mutual fund products by NBFCs by doing away with the requirement of a prior permission from the central bank.
"On a review, since the distribution of mutual fund products by the NBFCs is on non-risk sharing basis and purely as a customer service, it has now been decided to dispense with the requirement of prior approval from the Reserve Bank for NBFCs to distribute mutual fund products," RBI said in a notification.
It has also been decided to dispense with the minimum eligibility criteria, RBI said, while adding that the guidelines on distribution of mutual fund products by NBFCs have been suitably modified accordingly.
RBI had allowed NBFC to distribute products in 2006 with restrictions.
As per the norms, the NBFC should comply with the SEBI guidelines or regulations, including its code of conduct, for distribution of mutual fund products.
The NBFC should not adopt any restrictive practice of forcing its customers to go in for a particular mutual fund product sponsored by it. Its customers should be allowed to exercise their own choice, RBI said.
Besides, the NBFC should neither acquire units of mutual funds from the secondary market for sale to its customers, nor should it buy back units of mutual funds from its customers, RBI said.
