Buying Mutual Funds With Cash Is Allowed But May Not Be Practical

Smallest of shops have scanners ready for payment. Cashless transactions have become so normal that actual money feels a little strange to hold. Now, if the smallest of transactions can be made online, can big investments be done in cash?

The answer is different theoretically and practically.

In theory, the markets regulator has allowed investments up to a certain threshold to be made in cash. Though this is allowed, making this investment may not be easily executed.

"Investments up to Rs 50,000 can be made in cash according to SEBI's norms. Even though this is allowed, this may have logistical issues as AMCs do not encourage this," said Arnav Pandya, the founder of Moneyeduschool. So even though investments can be made under the norms set by the market regulator, it comes with conditions. Specifically, the set limit up to which one can invest in cash.

This limit is not the only issue one would face while trying to make investments in cash. The logistical issue mentioned essentially means that most fund houses may not be able to actually accept the investment in cash.

"According to our team's checks, there used to be branches of AMCs that accepted cash, but they no longer do this," said Pankaj Mathpal, the managing director of Optima Money Managers.

So, if you walk into a fund house with cash, by provision the regulator's AMCs need to accept cash up to the set limit. But they may not be able to easily facilitate this investment. Thanks to the growth and ease of online transactions, most investors choose to invest via cashless payments.