SEBI introduces voluntary debit freeze facility for mutual fund folios

The Securities and Exchange Board of India (SEBI) has introduced a voluntary debit freeze facility for mutual fund investors to enhance the digital security of their holdings. The regulator said the feature will allow investors to lock their mutual fund folios so that no units can be debited until the folio is unlocked.

The facility will be available for both demat and non-demat folios and will initially be offered through the MF Central platform, an interoperable registrar and transfer agent (RTA) system designed to streamline mutual fund service requests.

According to the circular issued on 6 March 2026, the debit freeze option will be available only to investors who are KYC-compliant and have both a registered email ID and mobile number. Investors will be able to activate the lock through RTAs via the MF Central platform in the first phase.

SEBI said the Association of Mutual Funds in India (AMFI) will prescribe the detailed procedure for locking and unlocking folios and define the list of financial and non-financial transactions that may be permitted during the freeze period. Asset management companies and RTAs will also be required to disclose the process for opting into the facility and its implications on their websites and in the Statement of Additional Information.

The circular will come into effect from 30 April 2026. SEBI said the measure has been introduced to safeguard investor interests and strengthen the security framework for mutual fund investments.

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