SEBI in its recent circular has instructed Mutual Funds and their Registrars and Transfer Agents (RTAs like CAMS and Karvy) not to promote their apps to investors who are already managed by other distributors.
“Mobile apps or websites owned by RTAs or digital platforms etc. shall not be promoted to such investors who are not acquired/ managed by them directly. RTAs may communicate directly through their own channels, only as needed in terms of SEBI regulations,” notes SEBI’s recent circular.
In absence of any such restrictions earlier, mutual funds and RTAs used to send direct promotional messages to the clients of other distributors. Such a practice is against data privacy norms. Such a practice was clearly against the interest of the distributors of mutual funds.