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NPCI glitch leaves mutual fund investors empty handed

In an "unfortunate" incident, an upgrade to the National Automated Clearing House (NACH) system earlier this month left many mutual fund investors in the wind as their monthly payments did not go through. Thousands of investors have found that their payments to mutual funds got stuck due to a glitch in the NACH system which was being upgraded by the National Payments Corporation of India (NPCI), the Economic Times reported. On January 31, the NPCI was upgrading the NACH system but this coincided with a new rule by the Securities and Exchange Board of India (SEBI) which mandated that mutual funds should receive investors' funds and only then allot units to investors for orders up to Rs 2 lakh. The new rules came into effect from February 1, 2021. “We have recently migrated our systems with an objective to scale the NACH infrastructure to meet the increasing volume requirements and industry demands. This was a planned migration activity and during which we faced some initial teething issues such as delay in settlement. Unfortunately our migration coincided with the regulatory rule effected from 1st Feb. 2021, that NAV [Net Asset Value] should be realised only after the funds received by the Mutual Funds," NPCI said in a statement on Wednesday. Due to the simultaneous upgrade by NPCI and SEBI's new rule, lakhs of mutual fund transactions failed to go through leading to reconciliation issues for payment gateways. At least 500,000 to 1 million transactions from investors to mutual fund houses got…

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