Several facilities have been provided to help investors manage their investments in mutual funds with ease. Here are answers to queries in this regard.

How do I purchase units by sending a SMS?

To use this facility, investors must first register by filling a registration-cum-debit mandate form giving details of the mobile number to be registered in the folio from which transactions can be carried out.

The debit mandate form must be filled in and signed, thus authorising payment to the mutual fund by debiting the investor’s bank account for transactions.

AMCs will specify the scheme(s) in which transactions may be done through SMS. Once registration is complete, investors can purchase or redeem units by sending an SMS to a specified number. On receipt of such SMS into the Registrar’s server, it will be electronically time-stamped and units issued/redeemed, according to applicable NAV.

In case of purchase, the amount mentioned in the investor’s SMS would be debited from the bank account. This facility is currently offered by some AMCs.

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), normally an investor would give a cheque along with the application form and the amount is debited from his/her account immediately. Units are allotted later.

The ASBA facility allows investors to submit the application form and have the amount debited from their account only when the 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. 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/her 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 units allotted. Till then the funds remain in the investor’s account and earn interest.

How can I register for receiving dividends and redemptions electronically?

To receive payments electronically into your bank account, it is imperative that your bank’s IFSC code is registered in your folio.

You can do this 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. A cancelled cheque leaf 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 future payouts.

(Contributed by CAMS Viveka, an Investor Education Initiative from CAMS)

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