One-third of MF Utilities' transactions happen online

The new online system, Mutual Fund Utilities, allows investments into several mutual fund schemes through a single form

Nearly one-third of transactions through Mutual Fund Utilities (MFU), the new online system, now happen through the online mode. The MF Utility is an online system for distributors for submission of transaction forms online through a single window.

Investments into several mutual fund schemes can be done through a single form and a single cheque through the MFU making the process of investment time and cost-efficient. “Today, almost 35 per cent of all transactions in the MFU are through the online route. Once the distributor logs in to the website, all his work gets transformed online,” said V Ramesh, managing director and CEO, MF Utilities.

 

Distributors can log in to the MFU system and submit client transactions to several schemes through a single form. Distributors can submit transactions to any one registrar and transfer agent (RTA); earlier, they were required to submit different forms for different RTAs.

MF Utilities started operations in January this year and is aimed at moving MF transactions online, reducing the time and costs for distributors. At present, 4,300 large and small distributors have signed up with the MFU and many more are in discussion to sign up, said Ramesh. The schemes of 25 mutual funds, covering 92 per cent of the total assets under management (AUM) of the sector, are available through the distributors registered with MFU.

However, only distributors are allowed to use the system for transactions currently. Individual investors cannot transact on their own even though the Know-Your-Customer (KYC) processes are carried out by the MFU. For the investors, the advantages include single-cheque payment and single account number, called common account number (CAN), even if the investment is spread across multiple asset management companies (AMCs).

MFU has opened about 9,800 CANs so far. On an average, each CAN has nine folios with investments in about five AMCs.

The investment money is collected in an escrow account run by the MFU from where it is disbursed to the different AMCs. Outside of the MFU, investors still have to submit separate forms for different RTAs. These forms, then, have to be submitted at the points of service of each of the RTAs. Most of these submissions take place between 12:30 and 2:30 pm every day. Transactions for the day are processed only after 3:00 pm, after the closing of the daily submission deadline.

However, the MFU allows for real-time processing of the transaction forms as the submissions are online. CAMS and KARVY are two of the largest RTAs in India. Besides these, some fund houses such as Franklin Templeton and Sundaram Mutual operate their own RTAs.