Paytm Money to make demat account mandatory for MF investment from July 25

Suresh P. Iyengar | | Updated on: Jul 06, 2022

To stop MF transactions, existing SIP of non-compliant investors

Paytm Money, a stock broking firm, will stop accepting direct mutual fund investment of investors who do not have a demat account and have not updated their KYC (know your customer) documents.

As per the company’s communication, failing to migrate to a demat account before the July 25 deadline will mean that customers’ future investments in mutual funds (MFs), including systematic investment plans (SIP), and redemptions will be stopped until the KYC process is completed.

Varun Sridhar, CEO, Paytm Money, said it has been executing direct MF transactions for retail investors with the RIA (registered investment advisor) code using its own technology platform.

Migration to BSE StAR exchange platform

“We are now migrating to the BSE StAR exchange platform and our transactions will use our broking code instead of RIA Code. To ensure continuity of investors’ saving plan, all investors are required to have a UCC (unique client code) as per SEBI regulations,” he added.

Consequently, they have to update their KYC and complete account opening form for a demat account.

“We have waived all charges and fees for this demat account as long as clients are investing only in MFs. Further, the MF units will continue to be in statement of account form and not in demat form. Only if the investor transacts in equity they will be charged as per the current equity tariff, he said.

Post launch of the migration process, many clients have already completed their demat account opening and KYC to the BSE StAR MF platform, said Sridhar.

Simple process

To complete the migration to a demat account, users have to upload an image of their signature on a blank paper, besides a photo (clicked via the Paytm Money app). Fresh MF investments will continue to be in the direct plan.

Any action related to past MF investments for non-compliant investors after July 25 deadline will have to be initiated on the AMC (asset management company) website.

Investors who do not want to migrate to the broking business can continue to make fresh investments, redemptions and SIPs directly from the websites of the AMCs concerned. The firm has also allowed investors to place redemption requests on its platform before July 25, which will be processed in three trading days.

Published on July 06, 2022
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