UPI: There is no money in the bank account, now make UPI payment through mutual fund, but this is the catch..

If you do not have money in your bank account and want to make a UPI payment, then there is no need to panic. Now you can make a UPI payment from the money parked in the mutual fund. However, this is done only through the bank's savings account. This has now become possible due to the integration of mutual funds with UPI by the fintech platform Curie Money.

While banks now offer only 2.7-2.75 percent interest on savings accounts, liquid mutual funds offer a return of 5-6%. Curie Money allows users to make UPI payments that are instantly debited from their liquid mutual fund units and routed through the bank account. This turns your investment into a spendable wallet. Curie acts as a mutual fund distributor. The number and value of transactions are still very low. It supports bank accounts of many lenders, but works best with Yes Bank due to deeper integration.

Instant redemption facility from liquid and overnight funds

SEBI allowed instant redemption of up to Rs 50,000 or 90 per cent of the investment (whichever is lower) from liquid and overnight funds in 2017. Asset management companies (AMCs) offer this with a separate redemption request, but Curie links it directly to UPI payments. It is similar to regular UPI, except that you get email and SMS alerts from the AMC about the units being redeemed.

There is a catch, however. SEBI has neither allowed nor prohibited UPI-linked redemptions from such funds. SEBI allows instant redemption but does not specify how the money should be used.

UPI payments are initiated from the bank account: Arindam Ghosh

“When users redeem their investments from liquid mutual funds through Curie, the funds are directly credited to their linked bank account. All UPI transactions initiated through the Curie app are initiated from this bank account,” Arindam Ghosh, founder of Curie Money, told Mint. This means that Curie does not directly link UPI transactions to mutual fund units in real time. Instead, redemptions are first processed in the user’s bank account, and UPI payments are made using the balance in that account.

NPCI’s clarification

According to the National Payments Corporation of India (NPCI), which develops the UPI network, mutual fund redemptions on the Curie Money are first credited to the Yes Bank digital savings account and then used for UPI payments.

This account is offered through Curie Money’s partnership with Yes Bank. Within the Curie Money app Mutual fund investment facility is provided through ICICI Prudential Mutual Fund.

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