Updating your folio: New bank details

We sometimes hear an investor say, “I have changed my bank account and did not inform the mutual fund. I have received a dividend cheque with the old bank details printed therein. Please resend the cheque with the new bank details.”

Credit to an investor account may usually not happen if the account has been closed and the investor has to request for a fresh cheque.

It is therefore imperative to update the current bank details in your folio. We give below a checklist for investors to ensure correct and speedy payout of dividend and redemption proceeds.

Core-banking account number : There could be a change in bank details as an investor's bank may have installed Core-Banking Solutions. Investors should remember to update the new account number.

This can be updated by sending a written request duly signed by the unit holder(s), along with a cancelled cheque leaf with the investor's full account number printed therein, to update the same.

IFSC Code : IFSC or Indian Financial System Code is the electronic address of the bank branch where funds would be transferred. It is an alpha-numeric code containing 11 characters, allotted by the RBI to uniquely identify bank branches in India.

Investors who register their IFSC codes in their folios will be eligible to get electronic payouts through National Electronic Fund Transfer (NEFT) / Real Time Gross Settlement (RTGS). Attach a cancelled cheque leaf reflecting the code, along with a signed request to get the same updated.

Mode of payout : While sending a request to update the IFSC code in the folios, investors may also request for the mode of payout of dividend / redemption proceeds in the folio to be changed to electronic.

Opting for the electronic mode of payout ensures a faster, safer and more definite receipt of payout compared to cheques.

Registration / Deletion of bank account(s): Mutual Funds now offer a facility to individual investors to register up to five bank accounts in a folio.

To register additional bank accounts, investors have to fill in the registration form. Forms are available at the mutual fund websites / service centres. Investors have to attach a cancelled cheque leaf with their name and account number printed therein or a copy of the bank pass book / statement of bank account containing the name and address of the account holder and account number.

This copy should be certified by the bank manager with his / her full signature, name, employee code, bank seal and contact number.

Registering for this facility enables you to receive redemption proceeds into any one of the registered bank accounts of your choice without having to provide for bank details and the supporting documentation at the time of redemption.

A point to note is that mutual funds now have a cooling period before payout of redemption proceeds if an investor opts for a change in bank details at the time of redemption. Some funds may even not process a change in bank details if requested along with redemption.

The same form used for registering additional bank mandates has a section for deleting a bank account and investors should ensure that accounts not in use are deleted.

Default Bank Account : At the time of registering multiple bank accounts, investors have to specify any one bank account as a ‘Default' bank account. Dividend proceeds are processed only into this ‘Default' bank account. Investors may specify any of the bank accounts for the credit of redemption proceeds. If no account is specified in the redemption request, redemptions will be processed into this default bank account.

(Contributed by CAMS Viveka, an Investor Education Initiative from CAMS. The views expressed herein are general practices in the mutual fund industry and may vary on a case-to-case basis.)

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