We have seen frequent changes in
mutual fund forms and kyc norms recently. It’s really painful to approach all
the AMC’s separately and complete the formalities. After Fatca now new NACH
form is introduced wherein one time bank mandate is required to be registered for
future SIP. These frequent changes not only disturbed the distributors but also
investors are also not happy with this type of changes. Undoubtedly the mutual
fund investment is much better way of investment avenue which is not only
transparent but also tax friendly. The
procedure and frequent changes are cumbersome and block to its growth. There are
online platform available to transact but still it’s not that much popular and
large number of investors invest offline by filling up physical forms.
So is there any better way to
transact mutual fund wherein you can reduce the paper work. The answer is Yes.
Year back MF Utility is launched to reduce the paper work and I think its best
way to transact in mutual fund. MF Utilities India Pvt Ltd (MFUI) is the Shared
Services initiative formed by the Asset Management Companies (AMCs) of SEBI
registered Mutual Funds. The prime objective of MFUI is to consolidate all
“Transaction Requests” received by the industry from multiple sources and
transmit it to the “Fulfiller” of the request (Transfer Agent), thereby
bringing in operational efficiency by reducing multiplicity and duplication of
activities. MFUI is equally owned by the AMCs of SEBI registered Mutual Funds
in India The important features are as under which can help us to reduce the
paperwork.
1) Common Account Number:
MF utility provides opening of
CAN to manage all mutual fund investment across all the AMCs. Investor has to
open once the common account number and after opening this account they can
transact across all the mutual fund houses under one account number. Investor
can open CAN under single, either or survivor or joint folio similar to common
practice while opening the new folio with any AMC. The investor needs to submit
copy of PAN card, KYC details and cancelled cheque of sole/first investor while
opening the account. After opening CAN there is no need to open separate folio
with every AMC. There is standardise forms and process already in place which
not only reduces the paper work but also saves time and energy.
2) Multiple bank account possible:
CAN allows investor to register
five different bank accounts while opening the account. This can help investor
to decide in which bank they want redemption amount to come. Surely five
accounts are more but it is not compulsory to give five bank account details.
Investor can register even one bank account while opening the account, but if
anybody wants to register more bank account it is possible at the initial stage
only.
3) Multiple Transactions Possible:
After opening account investors
can initiate multiple transactions for purchase, Switch and redemption. At
present five schemes can be transacted in single form. Similarly multiple STPs
and SWPs are also possible through single form. So if any investor wants to
invest in five different schemes of different fund house this new option allows
him to open CAN and transact with single form instead of opening five different
folios in each AMCs. The same way five SIPs can be started by filling single
form or five switch or redemption can be done with single form. Investor need
to sing and draw a single cheque for transacting in five schemes instead of
five cheques which are required if you approach all the AMC separately.
4) Existing folios mapped to CAN:
After opening common account
number all the existing folios of the investor matching the CAN criteria is
mapped to the CAN. Investor will also get all earlier and future investment
details on his/her mail regularly or can ask for the details whenever investor wants
from MF Utility. Distributor through whom investor has transacted can also give
all the required information whenever needed.
It is also important to note that
CAN application form and all transaction forms can be submitted to either MF
Utility, CAMS or Karvy centers instead of approaching multiple AMCs. All future
changes in procedures can be easily done at single point. Distributors can also
see all the transaction online which will help them to review investor’s
portfolio easily and recommend suitable changes. I think this platform is very
much timely and can help both distributors and investors to reduce the paper
work and come to single point of contact for all future transactions in mutual fund.
Distributors need to shift to this platform at earliest to reduce the paper
work and also time and energy. This will also add value to go green initiative
in our country.
This article first appeared at indianotes.com
http://www.indianotes.com/Finance-How-to/MF-Utility--Better-amp-Easy-way-to-transact-MF/200819/2/T
