Facilities to manage your mutual funds

Several facilities have been provided to investors to bring convenience and ease in managing their investment in mutual funds. Some useful facilities are explained here through Q&As.

I understand that recently some AMCs have started offering the facility of making a purchase through an SMS. How do I go about this?

For the convenience of investors, some mutual funds have given investors the facility of transacting through mobile phone by sending a simple SMS. To avail of this facility, investors must first register by filling a registration-cum-debit mandate form. This form contains details of the mobile number to be registered in the folio and 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 as and when transactions happen.

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 as per applicable NAV. The amount mentioned in the investor SMS in the case of a purchase would be debited from the bank account. Please check with your fund if the facility is offered.

Mobile Apps : As the use of smart phones gains ground, investors may note that some funds do allow investors to transact though mobile after downloading an application (app) for the purpose.

What is the ASBA facility for NFOs?

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), an investor would normally give a cheque along with the application form and the amount would be debited from his/her 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 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 to invest in the scheme's NFO, the bank blocks the said amount in his or her bank savings account. Upon allotment of units by the Registrar, the information is exchanged with the banker and the amount is released to the extent of the amount for which units are allotted.

Till then, the money remains in the investor account, earns interest for the investor. It also saves the hassle of receiving a refund if units are not allotted for any reason.

Is it possible to register for receiving all payouts of dividends and redemptions electronically? Currently I receive cheques and this is inconvenient.

Yes, you can register to receive all payments electronically. To receive payments through a credit into your bank account, it is imperative that your bank IFSC code is registered in your folio. You can register this in your folio by sending a written request duly signed mentioning the IFSC code and requesting the mutual fund to register the mode of all payouts as NEFT i.e. by electronic transfer to your account. A cancelled cheque leaf of the bank account registered in your folio (showing the IFSC code) 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, an Investor Education Initiative from CAMS. The views expressed are general practices in the mutual fund industry and may vary according to the case).

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