T+2 settlement: After implementation of T+1 settlement cycle in Indian stock market, India’s equity mutual funds are now moving to T+2 settlement cycle from 1st February 2023. From 1st February onwards, equity mutual funds in India will be settled within two days instead of previous T+3 settlement cycle where it used to take three days for equity mutual fund redemption settlement. The mutual fund industry bodies announced about the same though a written media statement.
On why T+2 settlement is needed in India’s equity mutual fund redemption, A Balasubramanian, MD & CEO at Aditya Birla Mutual Fund and Chairman, AMFI commented that “T+1 settlement cycle for Indian equity markets is a global first. As an industry, we want to pass on the benefit to our mutual fund investors and hence we are proactively adopting a T+2 redemption payment cycle for equity funds. ”
NS Venkatesh, Chief Executive at AMFI added that “AMFI and its member AMCs always keep investor interest at the forefront. Since the day SEBI announced the phased movement of equity markets to T+1 settlement cycle, the industry has been preparing to shorten the redemption payment cycle and we are happy to announce the shift to T+2 redemption payment cycle effective February 1, 2023 onwards.”
Announcing about India’s equity mutual fund moving towards T+2 settlement cycle from February 2023, Association of Mutual Funds issued statement citing, “It has been decided all Asset Management Companies (AMCs) will move to T 2 redemption payment cycle for equity schemes, and implement this uniformly with effect from Feb. 1, 2023.”
On how it will benefit mutual fund investors, Divam Sharma, Founder at Green Portfolio — a SEBI registered PMS provider said, “A faster liquidity in Mutual Funds through the ETF T+1 execution will increase the percentage share of investors taking the ETF route. This will also encourage an increase in ETF offerings, which is currently very small when compared to markets like US. ”
From 27th January 2023, Indian stock market adopted T+1 settlement cycle for stock market investors. The landmark move aims to ensure faster liquidity to investors. Dalal Street is expecting rise in volume of the market after fast settlement cycle in Indian stock market.
Reference Link:- https://www.livemint.com/money/personal-finance/indias-mutual-funds-to-move-to-t-2-settlement-from-next-month-details-here-11674892400845.html