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Informist, Tuesday, Dec. 17, 2024

 

MUMBAI – The Securities and Exchange Board of India has issued a consultation paper for the formation of a service platform for investors to trace inactive and unclaimed mutual funds folios, as per the regulator's website. The platform would be called MITRA – Mutual Fund Investment Tracing and Retrieval Assistant.

 

The regulator said that the decision to come out with this platform was because over years, mutual fund investors sometimes lost track of their investments, considering they might have been made in physical form with bare minimum know-your-customer details. "The investments in open-ended growth option mutual fund schemes may remain invested perpetually until and unless investor/his nominee/legal heir approaches the concerned AMC (asset management company) for redemption/transfer/transmission. Due to unavailability of PAN (permanent account number), email ID or valid address, it is also possible that these folios do not appear in the unitholder's Consolidated Account Statement," the regulator said. Such inactive folios could become susceptible to fraudulent redemptions, the regulator said.

 

 

The draft said that the service platform is proposed to be developed by the registrar and transfer agents to provide investors with a searchable database of inactive or unclaimed mutual fund folios at an industry level.

 

The platform will be hosted jointly by the two qualified registrar and transfer agents Computer Age Management Services Ltd. and KFIN Technologies Ltd. as agents of asset management companies, and available through a link on the website of Mutual Fund Central, asset management companies, Association of Mutual Funds in India, the two agents and SEBI, the draft said.

 

As per the draft, an inactive portfolio will be defined as a mutual fund folio where an investor has not initiated any transaction--financial or non-financial--in the last 10 years. "There is no consequence for those folios appearing in the platform where the unitholder is aware of the investment and has chosen to remain invested. The objective of the platform is to encourage investors to search for forgotten MF investments and update KYC as per the current norms," the circular said.

 

The agents will be responsible to maintain compliance with all applicable regulations, including the cyber-security audit and the system audit. They will also have to be compliant with the guidelines of business continuity plan and disaster recovery as specified by SEBI. Asset management companies will set up a committee to review unclaimed amounts of dividend and redemptions and take necessary steps to reduce the quantum of such unclaimed amounts.

 

The regulator has sought comments on the draft circular by Jan. 7.  End

 

Reported by Kshipra Petkar

Edited by Akul Nishant Akhoury

 

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