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Today, investors can use MF Central to carry out 90-95% of their mutual fund-related financial transactions and all except one of the non-financial transactions, says Anuj Kumar, managing director, CAMS, India’s largest registrar and transfer agent providing mutual fund services. In an interview to Mint, he says that jointly-held folios will also be able to transact, probably after a few months. Edited excerpts.

MF Central began with non-financial transactions being made live on the platform in September 2021. Then came the app and, financial transactions were activated only a few weeks ago. The platform was to be fully functional by December 2021. Why was there a delay?

We went live in September with the website and then got the two apps, both Android and iOS, in December 2021. In the interim, there were regulatory changes— on how monies are to be accepted from investors and how units are to allotted against these. There was also need for a a third-party verification of beneficial bank accounts and stronger ironclad authentication through two factors. This was fairly comprehensive and so the core design of MF Central could not have been as planned originally. All these changes had to be incorporated. So, that’s how we went live with the financial transactions in May 2022.

We’re now going live with what’s called the CAS (consolidated account statement) API on partner and platform websites. We are also going live with non-financial transaction facilitation on digital properties of asset managers.

So, today from a consumer’s point of view, 16 of the 17 non -financial transaction categories are all functional, except for changing signature that has not been made live.

From a financial transactions’ perspective, again 90-95% of these have gone live. You can do what is called a fresh purchase and an additional purchase. You can start an SIP (systematic investment plan); you can do switch and redemption, too. So, these big five are live.

What is not yet live is that consumers who are new to the capital markets and have not complied with KYC (Know Your Customer) previously cannot create a folio. Also, systematic transfer (STP) and systematic withdrawal (SWP) are not possible. Together, these three don’t contribute to more than 10% of the financial transactions.

What is not yet live, is that a non-KYC consumer (someone who's coming to the capital markets for the first time) cannot do a KYC and create a folio. Also, systematic transfer (STP) and systematic withdrawal (SWP) are not currently possible. These should be available in the next 30 days. Together, these three don't contribute to more than 10% of the financial transactions.

Highlight the key non-financial transactions that users use MF Central for.

Now, one of the most popular transactions is adding a nominee. It was a paper-intensive process earlier, but is seamless now based on OTPs (one time paswords). You can also change your bank account. A complaint dashboard is available and a full portfolio view of all holdings, including demat and ETFs, is available . So, from an investor’s point of view, it significantly enhances the experience.

You can also do the first leg of transmission— the process of transferring the ownership of mutual fund units to the surviving unitholder (in case of jointly-held folio) or a nominee, on the unitholder’s death—though the second one is still exactly the way it used to be.

So, what a person can do is that if the first unit holder is not alive, then the intimation of that and uploading the death certificate can be done in one operation which then travels across the MF industry. So, that means the intimation has now come to the RTA (registrar and transfer agent) and after that, the indemnitees and the documents have to be presented to the RTA in a physical format. There are visible means to automate the rest of it also. I can’t give you a date and a plan on when that will happen. So, you will see further refinement in the transmission process.

Each AMC has its own process of transmission and requires a different list of documents. So, how is this done at MF Central?

Significant progress was done in this area when the ease of doing business committee was formed. The non-uniformity used to be in the list of the documents, value of the stamp paper and in the text of the indemnity. So, to a large extent, this has been unified as a result of the working of that committee. All these are available on MF Central platform and can be downloaded, printed and signed.

Does completion of transmission take a long time?

I’ll give you one statistic: 75 to 80% of the transmission requests are dealt with within seven days of these coming to our front offices. And for a lot of them, we access only the scanned images. In a few instances, we do ask for the physical documents.

In case of jointly held portfolios, investors are unable to transact on the platform. When is this likely to change?

Over 90% folios today are either held singly or held in ‘either or survivor’ mode. These folios are covered. For the joint folios, we have to seek consent from both holders. And then both have to be available at the same time to be able to say yes. So that’s a slightly more complex flow, which was the choice we had to make when we went live. This represents only about 10% of the market. This requires some changes and will probably take a few more months.

How do MF Central users get customer support?

They can send an email for any issue. There is no helpline number as of today.

Have there been instances where users have not been able to view their investments on the platform?

The only condition is that the PAN and mobile number or PAN and email ID should be present everywhere. So, if these are there, it will aggregate.

When was the MF Central app launched?

So, this app was launched in Android first and then iOS in December 2021. Overall, MF Central has 250,000 subscribers. So, it’s about 1% of the universe of PANs in the overall MF ecosystem. On a daily basis, we are now seeing about 8,000 unique logins.

Some app reviews by users highlight log-in issues. How are these being resolved?

I’ll be honest with you. What I have seen are very nice comments coming in from the investors. I think, it was always their desire to see a single live statement, not something which came by post and permit them to do non-financial transactions. It is possible that perhaps during the beta phase, there could have been any website loading or traffic issues, not that we have heard much of those. But today, if you go by Twitter, which is the best indicator on what investors are experiencing, you will see uniformly positive sound bites.

MF Central was originally envisaged as a platform for investors, mutual fund distributors and RIAs. Whereas even today, it’s only there for investors. When will this be rolled out to distributors and RIAs?

One of the big things that the industry always wanted was a live CAS. That API is now live and there are platforms which have already signed up with us which are getting integrated. So, one part of bringing the platforms, RIAs and distributors is already completely underway. The second is the non -financial transaction APIs, which are ready. We’re just taking this live on phases because there is a significant amount of testing and integration work. So, that just leaves the financial transaction APIs, which could be four to six weeks from now.

There have been instances where email IDs and mobile numbers are not getting captured in the account statements for all new folios with AMCs where CAMS is the RTA. This can deny investors access to their investments. How is this being resolved?

The industry has gone through a large series of changes (protocol of two-factor authentication, third-party verification and no pooling of funds) in the last few months and these had to be implemented. We have always declared our success of such work immediately after completion on our website. But, what did happen was that a couple of the partner organizations were not fully ready, maybe for a few days and at that time, CAMS worked very closely with the partner organizations, whether they are payment gateways or distributors. So, the consumer only knows CAMS and if they see something not going right, they will tag us and talk to us, in which case, obviously, our marketing team and the social media division get in touch with them. All of that was sorted. But what I want to assure you is that those were ecosystem issues and not CAMS-level issues but were interpreted as that of CAMS.

Why does one need MF Central when there are other platforms too?

So, think of it as a thin veneer over the RTA platform. It’s real time, it’s live. There are no timelines, there is no batching of anything. Otherwise, the mutual fund industry is largely built on batching, which means you accumulate a number of things, create a stack, and once you have a stack, to push it to the RTAs, whether digitally or physically, that’s how the system works. From a CAMS perspective, the platform has ETF and demat data which never used to be there and with digitization of the non-financial transactions, it’s has taken a major leap in terms of delivering that advantage.

We will democratize the ecosystem, which means once these APIs reach the other platforms, to an extent, they will also have the same advantages. We are democratizing in a very large way. And therefore, more than building a brand or a product for MF Central, we are building a convenience across the mutual fund industry. That is the real moto.

Today, I can do my non-financial transactions on MF Central. So, as you share that with other platforms, won’t you lose your competitive advantage?

Right. It’s a question of defining the priorities. So, when it was being designed, the bedrock was convenience for investors and it wasn’t to create a unique property. So, we will continue, following that, if it means giving away some competitiveness, that’s okay.

What are your plans for monetising the platform?

So far, the build phase has been completely free for everyone, we are not allowed to charge investors. So that will not happen. There are potentially monetization opportunities in the APIs. Especially think of the CAS APIs or financial transaction APIs that could lead to some element of revenue. So we have been actively considering and figuring out where any of that could come from. But like I said, more than a profit or revenue motive, it’s been an industry level utility creation model.

Market regulator Sebi recently come out with a consultation paper where it has talked about making insider trading regulations applicable even to trading of mutual fund units. The paper right at the start mentions, in the past, it was observed that an RTA of a mutual fund had redeemed all its units from a scheme being privy to certain sensitive information pertaining to scheme of mutual fund, which was not yet communicated to the unit holders of a particular scheme. What do you have to say about this, and can RTAs by virtue of their role easily misuse information? Are there any regulatory check and balances in place?

One, of course, my only comment would be that the captioned RTA is not CAMS. The second thing is that we have very significantly intertwined with the mutual fund ecosystem, especially on the liabilities operational side. We are data keepers to the mutual fund industry. So, to that extent, sensitive information does come up with and is stored by us. And, so far, we have displayed for three decades the most pristine form of diligence and accountability of handling that information.

There has been a very large framework around us on data management, data leak prevention, data and cybersecurity risk mitigation and this has been built over decades. And through significant checks and balances, audits, testing, controls posture and having independent committees, auditors, advisory committees, technology committees, etc., the surveillance on this entire framework is significant. And very little of that surveillance is something that we do ourselves, there is external surveillance at all levels.

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