Capital market regulator Securities and Exchange Board of India (Sebi) has proposed a platform to provide relief to investors who have lost track of their mutual fund investments.
Releasing a draft circular on Tuesday, Sebi expressed its intention to launch a service platform, MITRA or Mutual Fund Investment Tracing and Retrieval Assistant, that will help investors track their inactive and unclaimed mutual fund folios.
Investments in open-ended schemes can remain invested indefinitely until the investor approaches the concerned AMC for redemption or transfer.
Also, since PAN, email address or valid address are not available, these folios may not appear in the consolidated statement of account of the unit holder. Therefore, inactivity in mutual fund folios can occur due to investors losing track of their investments or due to the death of investors.
Such inactive folios can even become vulnerable to fraudulent redemptions. Sebi plans to launch the platform to solve such issues.
What is an inactive folio?
An inactive folio is one in which no investor-initiated transaction has occurred in the last ten years, but a unit balance is still available. Thus, inactive folios also include those in which the investor might have remained invested in an open-ended arrangement and either elected not to redeem or simply lost track of the investment.
MITRA: Here are the most important details
1. A service platform is proposed to be developed by the RTAs (Registrar and Transfer Agents) to provide investors with a searchable database of inactive and unclaimed mutual fund folios at sector level. This platform will enable investors to identify overlooked investments or investments of others for which they are claimants.
2. The platform will also encourage investors to conduct KYC as per current norms, which will reduce the number of non-KYC compliant folios.
3. The platform will work towards reducing the number of unclaimed mutual fund folios.
4. MITRA will also contribute to building a transparent financial ecosystem and will be a reliable medium for investors to find their inactive or unclaimed mutual fund investments.
5. It also plans to take measures against the risk of fraud.
6. The platform will be co-hosted by the two Qualified RTAs (QRTAs) – Computer Age Management Services Limited (CAMS) and KFIN Technologies – as agents of AMCs and will be available via a link on the website of MF Central, AMCs, AMFI , the two QRTAs and Sebi.
7. Sebi also recommended that AMCs, QRTAs, AMFIs and mutual fund distributors should spread awareness about this initiative among the investors.
