Amfi asks MF Central to stop sharing investor data with third-party apps

Move to impact loan-against-mutual fund, guided MF investment apps

The Association of Mutual Funds in India (Amfi) has asked MF Central, a transaction platform operated by CAMS and KFin Technologies, to stop sharing investor data directly with fintech applications, said people in the know.

 

At present, several online applications, especially those that offer guided mutual fund (MF) investments and loan against mutual funds, access investor data through MF Central. The platform provides the data by taking investor consent through one-time passwords (OTPs).

 

The issue with this setup, according to MF officials, is at multiple levels-- concerns around data security and possibility of investors providing consent without realising. MF distributors also have an issue with this method as it provides an easy route for fintechs to acquire clients. 

“At a time when data security is becoming more and more crucial, easy sharing of investors’ data with third party apps is not the right thing,” said a senior MF executive.

 

A senior official at another fund house, while confirming the development, said that the direction from Amfi should not be looked at as a move curtailing digitisation and innovation.

 

“The issue is only with the direct sharing of information, the right to which is only with the investors. Any data required by a third party, should be provided only by the investor,” he said.

 

If the current practice ceases, fintechs will have to source data from the investors, who can download the consolidated data from RTAs’ websites or MF Central.

 

Fintechs that have portfolio management services (PMS) and registered investment advisors (RIAs) licences have the account aggregator option.

 

Emails sent to Amfi, CAMS and KFin remained unanswered till press time.

 

MF Central was set up in 2021 by CAMS and KFin -- the only two registrar and transfer agents (RTAs) of MFs in India -- as a common platform for investors to execute financial as well as non-financial transactions across fund houses. Given its association with the RTAs, it can pull out consolidated investment data of all MF investors. In November 2024, CAMS and KFin forged a new standalone entity to operate the MF Central. The joint venture was formed to explore monetisation opportunities for the MF platform while also expanding its services. 

Data risk

• Several investment apps are connected to MF Central via Application Programming Interface (API)
• The tie-up allows apps to access investors’ MF portfolio data through OTP authorisation
• MF officials see scope of data misuse in this system, say data to apps should only flow through investors