ACCORDING to AMFI guidelines, investments made through third-party cheques are not to be processed by mutual funds. A cheque is-sued by and signed by any other person other than the first holder of the investment is a third-party cheque.
The Exceptions:
Payment may be made by parents/grand-parents/ related persons on behalf of a minor in consideration of natural love and affection or as gift for a value not exceeding . 50,000 (each regular purchase or per SIP instalment). Payment may be made by employers on behalf of employees under Systematic Investment Plans through payroll deductions will be exempted. Payments can be made by custodians on behalf of FIIs or clients. However, such applications will be considered only if accompanied by:
• A declaration mentioning the relationship with the first holder. (These declarations are expected to be part of the application form issued by mutual funds.
• PAN copy and KYC acknowledgement of the person or entity who is making payment on behalf of the investor. These documents should be attached with the application form.
Dealing With Multiple Bank Accounts:
If you provide a cheque from a different bank account, the cheque lead should have your name printed therein. For instance, suppose you mention SBI as your bank account. Now if you are issuing an HDFC Bank cheque which has your name printed on the cheque, it's fine.
If the cheque leaf does not have the name printed, investors should submit a copy of the bank statement, attested by the bank manager as evidence for holding the account. Else, investors should first register multiple bank accounts in each folio, with the mutual fund. This will ensure that your subscription will not get rejected under the ground of third party cheque.
You can issue a demand draft. Such applications will be accepted if the draft is accompanied with a certificate from the issuing banker stating the account holder's name and the account number which has been debited for issue of the instrument. The account holder's name mentioned in the certificate should be that of the first holder. If the said certificate from the issuing banker is not attached, the referred application will be treated as 'Not In Good Order' (NIGO) and will not be processed.
