MFs urge investors to de-link YES Bank account and scout for alternatives

Move aimed to avoid funds getting blocked in account post-redemption request.

Mutual funds, distribution platforms and individual advisors have asked investors to immediately look at alternative bank accounts for their investment mandate with a moratorium coming into force on YES Bank.

Nilesh Shah, managing director of Kotak MF, said in a social media post that if clients wanted to change their redemption bank account mandate from YES Bank to any other bank they could send a request. "We shall process the request for tomorrow's redemption so that their money isn't blocked."

Zerodha -- which runs the distribution platform Coin -- has also urged investors to look at other accounts.

"We have cancelled all fund withdrawal requests made by clients to their YES bank accounts so that the money doesn’t get blocked. Please change, if your primary bank account is YES, to any other and withdraw the funds," Nithin Kamath, founder and chief executive officer of Zerodha said in a post.

"We have called up our clients and told them to immediately change the bank account mandates," said Bharat Bagla, an individual MF distributor.

Further some platforms are also taking steps to restrict fresh flows to the schemes of YES MF, given the uncertainty around the fate of the asset management company after the bank is amalgamated into another bank or entity, which is likely to have its own MF subsidiary.

"We have discontinued all fresh investments in YES AMC with immediate effect. Existing investors in YES AMC schemes can continue to send requests for redemptions," Paytm Money said.

On Thursday night, YES Bank was placed under moratorium by RBI with the withdrawal limit capped at Rs 50,000 for account holders.