How SEBI Plans to Make Transacting in Mutual Funds Simpler

The platform will, inter-alia in phases, enable users to execute the following:

• Mutual fund transactions--Purchase, Redemption, Switch, etc.

• Initiation and tracking of services requests--Change of e-mail ID, contact number, bank account details, etc.

• Initiation and tracking of queries and complaints

• Access investment-related reports such as mutual fund holdings (both in demat and standard Statement of Account), transactions reports (including historic transactions), capital gains/loss report, details of unclaimed dividend/redemption, etc.

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Asset Management Companies (AMCs) and depositories will facilitate RTAs by providing data via APIs on a real time basis to the platform. Additionally, RTAs and Depositories will share their respective data feeds between themselves for generating investment-related reports.

Over time, the platform may also provide services to the distributors, registered investment advisors, AMCs, Stock Exchange platforms and digital platforms for transacting in mutual funds. This will further enhance investors' experience in investing and putting in service requests.

Further, to ensure secured transaction on the platform, the RTAs will be responsible for complying with the Cyber Security and Cyber Resilience framework specified by SEBI. Additionally, the RTAs will ensure that the platform complies with the guidelines for Business Continuity Plan (BCP) and Disaster Recovery (DR) specified by SEBI.

The platform will be operational in a phase manner (starting with non-financial transactions) and will be fully operational by December 31, 2021.

What are mutual fund RTAs?

Registrar & Transfer Agents (RTAs) are responsible for maintaining the record of investors and the units that they hold. The functions of the RTA include:

1. Processing of all purchase and redemption transactions of the investor.

2. Managing the financial transactions of receiving funds for purchases and making payments for redemptions.

3. Updating the unit capital of the scheme to reflect these transactions.

4. Updating the information in the individual records of the investor called folios.

5. Keeping the investor updated about the status of their investment account and information related to the investment.

Computer Age Management Services Ltd. (CAMS) and KFin Technologies Pvt. Ltd. (KFintech) are the leading RTAs in India. Aditya Birla SL Mutual Fund, DSP Mutual Fund, HDFC Mutual Fund, ICICI Pru Mutual Fund, Kotak Mutual Fund, PPFAS Mutual Fund are some of the mutual fund serviced by CAMS. On the other hand, Axis Mutual Fund, Mirae Asset Mutual Fund, Canara Robeco Mutual Fund, BNP Paribas Mutual Fund, Invesco Mutual Fund, are some of the mutual fund serviced by KFintech.

How will the platform benefit investors?

There are various platforms available that enable you to undertake purchases and sale transaction across fund houses. However, investors often face inconvenience when making non-financial transactions.

For instance, say you have invested in five mutual fund schemes. Now if you wish to change bank account details for purchase and sale transactions, you will have to submit the relevant documents along with cancelled cheque to each of the fund house individually.

Similarly, if you want to update your registered mobile number and/or e-mail ID, you will have to send separate requests to CAMS and KFintech.

The common platform will facilitate all transactions and service requests through a single process which will significantly reduce the turnaround time.

So the common platform can be a great move for both financial and non-financial transaction. It would greatly reduce the investors' time, effort, and paperwork. As an investor, you will be able to make all your transactions in one place. Further, you will have access to all reports of your holding, transaction history, fund performance, statement of capital gains, etc. across fund houses at a single window platform.

Moreover, enhanced user experience can help in better penetration and growth of mutual fund industry.

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Frequently Asked Questions (FAQs)

How to transact in mutual funds online?

Once you decided in which scheme to invest, you can invest online through multiple options such as fund house's website, through the website of mutual fund RTA, through various online third-party investment platforms, or through Demat account. You will need to fill in personal details, bank details, and KYC details. Once these details have been verified, you can move on to select the scheme and transfer money online.

What documents are required to be able to invest in mutual funds?

If you are a first time mutual fund investor, you will require the following documents:

a) Application form to open an account with a mutual fund. If you wish to start SIP in a scheme, you will need to fill one more form giving details such as, frequency of instalment, instalment amount, and SIP date.

b) Electronic Clearing Service (ECS) mandate for auto-debit of SIP amount

c) KYC documents - Photo, Proof of Identity such as PAN or Aadhar, and Proof of address such as driving license, electricity bill, etc.

d) Bank statement or cancelled cheque

Once you update your mutual fund KYC with a fund house or RTA, you do not have to resubmit it when you transact next time.

How do I change bank account details?

To change or update bank account details in your existing portfolio download the relevant form from the respective AMC website. Then fill details such as your name, folio number, details of the new bank account. You will also need a cancelled cheque leaf for the new bank. Then sign the declaration and send it to the respective AMC.

How can I change the registered e-mail ID and mobile number?

You can update your e-mail ID or mobile number by visiting the service request page of the respective AMC or RTA. Select the option to update e-mail ID/mobile number and enter the details.

How to check the status of all my mutual funds?

An AMC sends periodic statement of account when you start transacting with them. Additionally, you get a consolidated account statement for all the transaction done in the previous month on the registered e-mail ID. You can also request the statement of a scheme from the AMC on its website or you can request a consolidated statement through the website of the RTA. The statement includes details of transaction, folio number, number of units purchased and sold, closing unit balance, and the current valuation of your investment.

Warm Regards,
Divya Grover
Research Analyst

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