Fund Basics: At your service, MF investor

Several facilities have been introduced in recent times to help you manage your investment in mutual funds.

Purchasing through SMS As a general practice, to avail of this facility, investors must first register by filling a registration-cum-debit mandate form. The former will contain details of the mobile number to be registered in the folio, from which transactions can be carried out.

The debit mandate form authorises payment to the mutual fund by way of debit to the investor’s bank account for transactions.

The detailed procedure relating to purchasing through SMS is available on the respective MF websites.

AMCs may specify the scheme(s) in which transactions may be done through SMS. Once registration is complete, investors may purchase or redeem units in the scheme by sending an SMS to a specified number.

On receipt of such SMS into the Registrar’s server it would be electronically time stamped and units issued/redeemed in accordance with the applicable NAV. The amount mentioned in the investor SMS in the case of a purchase would be debited from the bank account.

ASBA facility ASBA stands for “Application supported by blocked amount”. It is an authorisation by the investor to his banker to block the amount in the bank account and release it only after the allotment of units.

When there is a new fund offer (NFO), normally, investors would give a cheque along with the application form and the amount would be debited from their account immediately. Units would be allotted later. The ASBA facility allows investors to submit the application form and have the amount debited from their account only when units are allotted. Investors using the ASBA facility can fill up the NFO form and submit it to the designated banks — mentioned in the application form for this purpose. The investor should have an account in the designated bank to use this facility.

Based on this authorisation and application of the investor, which indicates the amount that he/she intends investing in the scheme’s NFO, the bank blocks the said amount in his or her Savings Account.

Upon allotment of units by the Registrar, the information is exchanged with the banker and the amount released to the extent for which units are allotted. Till then the funds remain in the investor account and earn interest for the investor. There is no refund required if units are not allotted for any reason.

Electronic receipt

You can register to receive all payments electronically.

It is imperative that your bank IFSC code is registered in your folio. You can register by sending a written request mentioning the IFSC Code and requesting the Mutual Fund to register the mode of all payouts as NEFT.

A cancelled cheque leaf of the bank account registered in your folio would have to be attached along with your letter.

On receipt of this request, the details would be entered in your folio and the mode of payout changed for any future payout.

Contributed by CAMS Viveka. The views expressed are general practices in the mutual fund industry.

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