Consolidation is important to facilitate the tracking and maintenance of MF accounts and giving an investor a one-view statement of all his investments in the fund. In addition to receiving too many statements, investors find it difficult to remember the folios when they have to transact (when they have too many folios). Also, it is easier to change details such as bank account, address and telephone number in a single folio.
But consolidation is normally done based on the investor’s choice. In 2010 so far, we have received requests from investors to consolidate 78,700 folios into 32,900 folios.
Is folio consolidation possible if, say, I buy three schemes (within the same fund house) through three different agents?
Consolidation of folios is possible even if an investor purchases through different distributors. Investors may submit a simple, signed request letter to the MF or transfer agent, asking for the consolidation of multiple folios in the MF into any one of the existing folios. For consolidation, some details, such as all holders’ names (should be in the same order in all folios), address, bank details, tax status of the investor, holding nature (joint or either or survivor) and nominee registered in the folios, need to be identical in all the folios. Some MFs may have specific guidelines.
Why do you think nomination is important?
Registering a nomination facilitates easy transfer of funds to the nominee in case of the investor’s death. In the absence of the nominee, a claimant would have to produce documents such as a will, legal heirship certificate and no-objection certificate from other legal heirs, to get the units transferred.
Would you recommend nomination if I put a second and/or third account holder in my MF investment?
If there are other holders in the folio, the units would be transferred to the second holder on the demise of the first holder or to the third holder on the demise of the other two. However, if something happens to all holders, the units could easily be transferred to the nominee.
Typically, whom should we appoint as a nominee? Can we appoint an organization as a nominee? Can a nomination be changed midway?
Any individual may be appointed as a nominee and the units will be transferred to the nominee. A nomination can be made in favour of individuals including minors, the Central government, state government, a local authority or a religious or charitable trust.
A nomination can be changed at any time. In fact, an investor may make up to three nominations and even specify the percentage of the amounts that will go to the nominees.
With stock exchanges being allowed to route MF transactions, do you see the business of a registrar and transfer agent undergoing a change?
The role has been undergoing a metamorphosis over several years as MFs thrive on product and service differentiation. Apart from allotting the units, the agent provides technology-based unique, value-added services to investors, distributors, asset management companies and other stake holders.
We’ve had concerns from our readers that MFs have not captured their data accurately. What measures have you put in place to ensure that processing of MF units happens at a faster pace than before, while ensuring minimal errors in capturing investor data?
Computer Age Management Services Pvt. Ltd has taken several initiatives to ensure that payments to investors are secure, fast, error-free and cost-efficient. We have been carrying out sustained awareness campaigns. To eliminate errors in capturing bank account details, in addition to filling details in the application form, we recommend submitting a cancelled cheque copy enabling us to capture the account number, MICR code and IFSC code.
We use advanced models of data quality monitoring and error rectification. The residual errors are largely due to a combination of illegible inputs and human errors. We encourage investors to intimate errors for prompt correction.