In a move to simplify mutual fund investments for current and potential investors, Securities and Exchange Board of India (Sebi) has proposed a prevalent platform for non-economic transactions such as updating address, mobile and e mail, tracking of queries and complaints, access investment associated reports of mutual fund holdings and at a later stage, for obtain and redemption of mutual fund units.
The platform will be jointly created by the Registrar and Transfer Agents (RTAs)—the two main ones are Computer Age Management Services and KFin Technologies—will have standardised practices and will be inter-operable to provide an integrated practical experience to the investors. Sebi has asked all the asset management corporations (AMCs) and depositories to facilitate the RTAs for development of the proposed platform. They have to provide information by means of Application Programming Interface (API) on a actual-time basis to the proposed platform and also share their respective information feeds amongst themselves for generation of investment associated reports.
What will the platform do?
In the initial phase (by December 31, 2021), the proposed platform will do all sorts of non-economic transactions. Later, it may possibly provide services to the distributors, registered investment advisors, AMCs, stock exchange platforms and digital platforms for transacting in mutual funds. Through the proposed platform, all mutual fund corporations, RTAs and depositories will have to harmonise the processes across the business to provide a single-window, integrated, simplified investment and service practical experience for the investors. Experts say a customer-facing web page must be quick to navigate and make sure ease of investing.
Benefits for investors
Individuals invest in mutual funds by means of the sites of the fund homes, MF Utilities (a transaction aggregation portal owned by the fund homes), distributors such as banks or fintech corporations. The proposed platform by Sebi will aid investors as they can get all options associated to mutual fund investments at a single spot in an integrated manner. However, the platform can’t give any investment assistance. Experts say the platform will save investors the hassles of reaching out to each and every RTAs for all their investment and redemption demands or any sort of non-economic transactions which includes capital gains/loss report, specifics of unclaimed dividend/redemption, and so forth.
Brijesh Damodaran, managing companion, BellWether Associates, says Sebi’s proposed platform has made excitement and anxiousness at the similar time. “For the investors it is a welcome move as all non-financial transactions across the RTAs can be executed at one place,” he says.
At present, if a mutual fund investor has to update the bank specifics or the make contact with specifics across the mutual fund holdings, he has to 1st submit the documentation across all the schemes/folios. So, if an investor has 5 holdings in 5 schemes of various AMCs, he has to submit the similar documents 5 occasions. “In the proposed platform, the investor will have to submit the documents at one place and only once. This was a long standing pain, which is now sought to be addressed. This is going to save time and efforts of investors,” says Damodaran.
Competition for fintech firms
At present, fintech firms provide clients a platform to invest in many mutual fund schemes absolutely free of expenses. However, they monetise by cross-promoting other economic items. Damodaran says the proposed platform will be a competitors to fintech firms and can wean away current investors. “For AMCs, however, the platform will help increase their reach with the investors and increase mutual fund penetration,” he says.