)
India’s mutual fund (MF) houses are opening the door of online investing to even first-time investors.
Gone are the days when an eligible customer had to either visit a branch office of a fund house or approach a distributor to invest money in fund schemes. Now, it’s all only a few clicks away.
All an investor needs is a Permanent Account Number (PAN), an e-mail account, mobile number and an online banking account. This is sufficient for somone who’s met the Know Your Customer (KYC) norms to invest in schemes of fund houses from home. The process is completely paperless.
Once the details are keyed in, fund houses give a call back to investors for verification. After which, one can start transacting online.
The sector has made a considerable move in this direction to make it convenient for first-time investors. Over two years, several fund houses have added this feature on their websites to enable investors to open accounts, either to start systematic investment plans or put in a lump sum.
ICICI Prudential AMC, Birla Sun Life MF, Reliance MF, UTI Mutual Fund, IDFC MF and Kotak MF are among those providing this facility.
The common KYC initiative from the Securities and Exchange Board of India (Sebi) and improved inter-linking of KYC registration agencies to share data about investors has made it possible.
Sundeep Sikka, chief executive officer (CEO) of Reliance MF, said: “The objective is to give convenience to investors so that it’s easy on-boarding for them when it comes to investments in MFs. Customers are more and more coming for e-commerce purchases; amid this, it’s our duty to also provide an easy online platform for investments.”
Experts agree it’s a step in the right direction and as purchasing behaviour is fast changing, such facilities will help the segment grow at a low cost.
ALSO READ: No charges for redeeming MFs before fund house shuts
Dhirendra Kumar, CEO of fund tracking firm Value Research, says: “The fund industry has done good work in this direction to make the process paperless. However, fund houses need to streamline the process further.”
He says at the time of investments there is generally no problem but possibilities of this can't be ruled out when it comes to redemptions.
Prior to this, a KYC-compliant investor had to open a folio with a fund house physically before s/he could invest or transact online. However, this is no more a constraint. However, there still are fund houses which have not yet enabled such services and continue to insist on the opening of a folio before rendering online facilities.
ALSO READ: MFs woo investors with concentrated portfolios
Sebi has formed a digitalisation committee which advises the regulator on raising the penetration of MFs through new technology. Recently, Sebi chief U K Sinha had also urged fund houses to improve the level of digitisation.
Sector executives told Business Standard the Association of Mutual Funds in India and Sebi were also working on how to make the KYC process online. Currently, KYC is done only offline. On many occasions, KYC is being hel d to be a constraint for bringing in potential investors.
