10% of folios yet to comply as March 31 deadline for MF nomination looms

As of end-February, total MF accounts was 144 million

Even as the deadline for filing mutual fund (MF) nomination or opting out is drawing closer, a fairly large number of investors are yet to comply.

Registrar and transfer agents (RTAs) estimate the count of such MF accounts (known as folios in MFs) to be about 10 per cent of total folios.

As of end-February, the total number of folios was 144 million.

The Securities and Exchange Board of India has made it compulsory for MF investors to register a nominee for their investments or declare their unwillingness. Investors failing to register their choice by March 31 will not be able to redeem.

The MF industry, including fund houses, RTAs, and distributors, has doubled down on efforts of late to nudge the rest of the investors to comply.

The RTAs — Computer Age Management Services (CAMS) and KFin Technologies (the two biggest RTAs in the Rs 40-trillion MF industry) — have been spearheading major efforts. They say the number of investors filing nominations or opting out has surged these past few days.

“Extensive communication with investors and intermediaries is being done. We have provided distributors reports that allow them to identify their clients who are yet to comply and encourage them to do so,” says CAMS, adding that 60,000-70,000 folios saw nominee updates every day last week, compared with the earlier 30,000. 

A senior MF executive says asset management companies on their part have been sending regular reminders to non-compliant investors on their email addresses and mobile phone numbers.

“We are sending non-compliant investors reminders with links for them to complete the process with ease,” he says.

MF distributors say they have been calling up such investors to convince them to conform.

“Nearly all our clients have acquiesced. Our entire service management team worked towards that goal for over two months,” says Amit Bivalkar, founder, Sapient Wealth.

Investors have the option of adding a nominee or opting out — either through an online or offline process. The online process requires the investor to visit the RTA website and update the nominee through a one-time password. However, this process may not work in the case of joint folios.

According to MF distributors, the online process is only feasible where joint folios have the mobile numbers of both holders registered.

In cases where there are such issues, investors can take the offline route by visiting any of the branches of the two RTAs.

Investors failing to comply before the March 31 nomination deadline will see their folios frozen.

Transactions like redemptions, systematic switch plans, and switch and systematic transfer plans will be restricted. However, they can continue to put money into their MF accounts.

Declare or get frozen

• The Securities and Exchange Board of India has made it compulsory for mutual fund (MF) investors to register a nominee for their investments or declare their unwillingness
• An initiative aimed at making the transmission of funds smoother in case an investor dies
• If the investor opts out, the heir will get the money
• Updates can be done online on any of the RTAs — CAMS, KFintech — websites/applications or on the MFCentral website