New Delhi, May 21 -- Markets regulator the Securities and Exchange Board of India (SEBI) has proposed allowing third-party payments in mutual funds under select, well-defined circumstances, marking a significant shift from the current framework that mandates all investments to originate exclusively from an investor's own bank account.

The regulator has invited public comments on the proposals until June 10.

Why the Change Is Being Considered

The existing regulatory framework requires mutual fund investments to be routed directly from the investor's bank account through RBI-authorised payment aggregators or SEBI-recognised clearing corporations - a safeguard designed to prevent misuse and ensure compliance with the Prevention of Money L...