Investor Queries: Online investing

Investing online facilitates hassle-free investing as transactions can be executed from your desk top. This week we address questions relating to the modes of investing online in mutual funds.

Investing online

Investments can be made online either through an online portal of the mutual fund or the RTA (Registrar & Transfer Agent).

The investor needs to apply for a user identity and password. There is usually an agreement called the IPIN agreement that needs to be signed and submitted at the mutual fund office or to the RTA.

The RTA then allots an IPIN and a user ID to the investor. With that, the investor can log on to the portal. There will be an option to “invest online”.

The investor can select the scheme and fill in the required details for making the investment. After this, he/she will be directed to the payment gateway and the investor can opt for the bank to make the payment.

Usually, a reference number will be generated, which the investor needs to keep as an acknowledgement for having completed the transaction.

The cut-off time will be identified by the server time displayed in the system. For all transactions received before 3 p.m. the NAV of the same working day will be considered.

For transactions received after the cut off, the NAV of the next working day will be applicable.

The investor needs to have a net banking facility to be able to apply and purchase online through any channel.

The account statement can be generated the following day; online or it will be sent to the investor by the RTA either by email or as a physical copy.

Through a distributor

Many distributors have a portal that offers investors an online investment facility.

The investor needs to register with the distributor and then log in to the website.

This will enable the investor to select the fund / scheme and then make the payment through a payment gateway that is similar to the web portal of the RTA.

Many banks also sell mutual fund products online and they receive instructions from the investors to debit their account.

Through the MFSS platform

Mutual Fund Service System (MFSS) is an online order collection system provided by the stock exchanges. Investors can buy units that are traded in the stock exchanges through their depositories by placing an order.

The units can be bought from a particular fund / scheme if they are available for sale and the order is then placed to buy units.

The amount can be settled through a broker and the units are then credited by the fund house to the investor's account. The units are bought and sold through the depository only.