HDFC Mutual Fund puts an end to cash investments from 30th January. Here’s what you need to know

HDFC Mutual Fund stops cash investments from 30th January

HDFC Stops cash investments

Regarding mutual fund investing, most investors prefer the bank debit mode, either through ECS facilities or through cheques and drafts. However, cash investments are also accepted investment modes, though uncommon.

Many mutual fund houses do not accept cash as a means of investment. HDFC Mutual Fund has joined the list of such companies and has issued a new rule. Per the new rule, HDFC Mutual Fund will not accept cash investments into its mutual fund schemes.

Why the move?

Currently, investors can make cash investments into their chosen mutual fund schemes with an upper limit of Rs.50,000. Such investors must fulfil the KYC (Know Your Customer) norms and provide their bank account details when investing in cash.

The cash investment mode is not very popular since it is cumbersome and requires physical investments. In today’s digitized world, cash has become redundant when there’s the facility of digital investments. Moreover, it has traceability issues since investors can use any source of funds to invest in cash.

From the AMC’s (Asset Management Company) perspective too, cash transactions require additional administrative work. After the COVID pandemic, as there were lockdowns and a reduced workforce, it became difficult to continue accepting cash investments. Moreover, the branches are not equipped to handle the pressure of cash investment.

To eliminate these hassles and make investments easier, HDFC Mutual Fund has introduced the non-acceptance of cash investments, just like other fund houses have already done.

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What about existing investors?

Existing investors, who have been making cash investments in their folios so far, will have to shift to other modes. They can invest through net banking facilities, ECS, UPI or mobile wallets.

The portfolios will not be affected. The folio will continue as is without any hiccups.

The benefits of going digital

The discontinuation of cash investments is a push to digital investments, which has been proven to be the much-preferred mode. Here’s why-

  • Low transaction costs for AMCs
  • Convenient for investors
  • Investments can be made in real-time
  • No need to visit the branch physically as investments can be made on-the-go
  • Ease of redemption, dividend payment and withdrawals as the money is credited directly to the bank account.
  • In the case of SIPs, direct debit from the bank account ensures timely and continued investments.

The discontinuation of the cash mode is nothing new. It is already being phased out, and investors are going digital. So, go digital and enjoy its benefits.

Related - Here's a dummies guide to mutual funds for your knowledge 

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