In a major relief to mutual fund (MF) investors and those who have invested in insurance schemes, the Central Board of Direct Taxes (CBDT) has asked financial institutions not to close accounts that are not compliant with tax information sharing law FATCA (foreign account tax compliance act).

MF investments worth 1.1 lakh crore are at the risk of either being frozen or closed for non-compliance of FATCA.

Most of these investments are in equities. The deadline for furnishing information as part of compliance is August 31.

"For providing immediate relief to the account holders and in wider public interest, it has been decided that, the financial institutions may not close the accounts by 31st August 2016 in respect of which self-certifications have not been obtained under the alternative procedure," the CBDT said.

"The revised timelines for completing due diligence in respect of such accounts shall be notified in due course." according to Meenakshi J Goswami, the official spokesperson of CBDT
"In the interim, the financial institutions should continue to work on completing the required due diligence, including obtaining self-certifications," he added.