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Mutual Funds Markets - Mutual Funds Columns - Mutual Confidence NILANJAN DEY
Imagine yourself as a trigger-happy investor, ready to sign a few hefty cheques to buy units of mutual funds. Your effort comes to naught, howsoever easy you thought it would be. The reason is simple. You, despite all the money you may have at your disposal, do not have what it takes to be a unit holder; you are deficient in what is being touted as `mutual fund identification number' (MIN). While a lot has been already bandied about MIN, it seems some sections in the market are yet to appreciate the significance of improved KYC (Know Your Customers) regulations. Others are questioning the very reason why MIN has been introduced. Mr A P Kurian, who heads the Association of Mutual Funds in India (AMFI), says he is trying to dispel these misgivings. In the process he is also providing answers to questions that are being raised thick and fast. For the uninitiated, an MF investor needs to submit identity and address proofs. The originals of documents along with their copies may be presented only once, and not again and again before various fund houses in which he may wish to invest. Mr Kurian, who refers to arrangements made with CDSL Ventures Ltd (CVL), a subsidiary of Central Depository Services, says CVL will issue a unique number to each investor. Now, if you quote the MIN, you will be able to acquire units of all funds without dishing out KYC papers all the time. Also, a single intimation will be enough to effect address changes at all the funds that you have invested in. All this of course will not apply if your investment is less than Rs 50,000. Will there be a time when even the sub-Rs 50,000 investor be required to get a MIN? Such a scenario may well be probable in future, Mr Kurian thinks even as he urges everybody to obtain MIN application forms from the AMFI Web site. He further adds that it will enable the MF industry to keep a tab on the growth of the investor populace.
Multiplicity of folios
"In the current scenario, there is a multiplicity of folios. The increase in number of folios is not a true indicator of things. MIN will make a difference in the way the industry tracks the growth of the market", notes the AMFI chief. It is clear that there will be a major disconnect between the number of folios and that of MINs. An investor can have any number of folios, but there will be just one MIN for him, he mentions. In fact, folios will just keep on mounting because of a number of factors. The arrival of many new funds will simply add to such increase. The past year was quite active in terms of new launches and all indications suggest that the coming months will see quite a few NFOs. If market conditions remain good and stable, the NFO pipeline may well grow thicker. A quick look at information provided by SEBI will tell you about the capital protection oriented products that have been mooted by Prudential ICICI and Birla Sun Life. Pru ICICI has also planned an interval fund. JM has filed an offer document for small- and mid-cap stocks, while HSBC has lined up a fund for investing in emerging markets. And these are not all. Feedback may be sent to nilanjan@thehindu.co.in
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