Fund Basics: Be diligent, update your details

In line with the recommendations issued by the Association of Mutual Funds of India, most mutual funds now do not register a change in bank details that is given along with a redemption request.

Redemption proceeds will be credited into the bank account in the folio or into a registered account indicated in the transaction slip. A new bank account would have to be registered at least 10 days before redemption is made.

Keeping folio records updated with the correct bank details is of vital importance. In this article, we discuss the requirements for registering new/additional bank accounts in mutual fund folios. Investors may check the addendums issued by the funds for any fund-specific requirements.

Stand-alone request

For changing many personal details in investors' folios, a written request duly signed is usually enough. However, for changing bank details, mutual funds now require additional requirements.

Along with your request letter, most funds now require documentary proofs for both the new bank you wish to update in the folio as well as the old bank account already registered. You need an original cancelled cheque leaf where the account number and the first unit holder's name is printed on the face of the cheque. The cheque leaf for both the old and new bank accounts should be submitted, as the case may be.

In case the customer's name is not printed on the cheque, a certified copy of the bank pass book or bank statement (not more than three months old) having the name, account number and address of the account holder may be submitted (again for both the old and new account). The copy should be certified by the bank manager with his/her full signature and name, and the bank seal.

An alternative to the above two is a letter from the bank on its letterhead, in original, certified by the bank manager with his/her full signature, name and employee code, and the bank seal. This should certify that the unit holder maintains/maintained an account with the bank, with details of the account holder's name, address and bank account number (if the old bank cheque leaves/recent account statements are not available).

Mutual funds offer a facility to register up to five bank accounts for individuals in their folios. A form is available at all fund Web sites for the addition/deletion of bank accounts and this is to be filled, signed and submitted with the attachment named above as proof of the additional account(s).

After you have registered additional accounts, if any account is closed later, you may fill the portion of the same form for the deletion of a registered bank account.

Default Bank Account

While registering multiple bank accounts, any one bank account should be chosen as default where all dividends/redemptions would be paid out.

Investors can ask for redemption proceeds to be paid to any of the accounts registered in the folio and this can be mentioned in the redemption transaction slip. If you do not mention any bank in the transaction form, it will be paid into the default account.

(Contributed by CAMS Viveka, an investor education initiative from CAMS. The views are general practices in the mutual fund industry and may vary according to the case).

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