Tired of filling several application forms to invest in different mutual fund schemes? Wait till March 2010, and you’ll just click this cumbersome process away.
The advisory committee of the Association of Mutual Funds in India (Amfi) has finalised a proposal containing recommendations for a common platform to provide easy access to investors and distributors to reduce costs, improve efficiency and save time. To begin with, investors will have to register with a designated agency that will give them unique identification numbers, which could be their permanent account numbers, and passwords. Through this, they can log on to a website, transact and access information, including the value of all their mutual fund investments.
The system is akin to the one adopted by the Pension Fund Regulatory and Development Authority (PFRDA), where you can approach a designated point of presence, register for the New Pension Scheme (NPS) and receive a Permanent Retirement Account Number (PRAN). The number also entitles you to track your investment, for which records are maintained by a central recordkeeping agency.
Amfi Chairman AP Kurian said, “We are working on a technology-driven common platform to provide easy access to investors and distributors. It will help fund houses improve their efficiency. Besides, transactions will be faster, thereby saving time and costs. And ultimately, it will provide a wider reach to investors.”
Currently, there are many mutual fund offices, distributors and franchisees in the industry. Investors submit their applications through these channels. From here, the applications go to the registrar and transfer (R&T) agents for processing and sending their account statements.
“This process is paper-oriented and time-consuming. Through a common platform, we are trying to reduce the paperwork as much as possible and connect the brokerages,” added Kurian.
According to Jaideep Bhattacharya, chief marketing officer of UTI Mutual Fund, the step is essentially to empower the investor with choices. “Once you empower the investor, the revenue will automatically increase. For instance, there will be a common application form for different mutual fund schemes, and one need not go to different fund houses for different application forms. Once this proposal is implemented, all the information will be just a click away,” he said. Bhattacharya is also a member of the Amfi’s advisory committee.
“It’s an investor-centric initiative. Instead of receiving several statements, an investor would get only one statement. For technology-savvy investors, statements will be available at a click. We want to go step by step. We are targeting March 2010, by which the new mechanism would be in place,” said Kurian.
Several other chief operating officers Business Standard spoke to also said that the measure was the need of the hour. It would help increase penetration in Tier-II and III cities with relatively lesser costs.
At a time when entry load has been banned by the Securities and Exchange Board of India and the Reserve Bank of India has, in its annual report, expressed concerns over the over-dependence of fund houses on corporate and institutional money resulting in poor rural penetration, industry experts feel that such a common platform will help fund houses address these issues.
