Common servicing platform for MFs: What it means for you

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Market regulator Sebi wants the mutual fund industry to create a common servicing platform. Once created, the platform will help investors execute non-financial service requests in a simple manner across asset management companies (AMCs) where they have MF schemes running.

“The way KYC process is centralized for AMCs, post-investment service requests will also be centralized soon. All AMCs put together will create a central website where post-investment services will be processed. This centralized platform should be ready by end of this year,” says R. S. Srinivas Jain, Executive Director & Head of Strategy at SBI Mutual Fund in an interview with Money9.

Simplifying post-investment service requirements

Once you do KYC with a fund house and start investing, you do not have to do it again if you plan to invest in another scheme from a different fund house. All you have to do is share your PAN details and simply start the investment.

However, if you were to change your bank account after investment, you will have to generate requests with each AMC separately. This is the challenge that a centralised platform will resolve for you.

“Unlike banks, MFs always had a centralised way of doing things. Sebi has done a great job at that front. Now it is taking the second step for post-investment service requests,” says Jain

“Apart from a common platform, there will also be APIs that will help you execute change at one of the fund houses and it will get executed across AMCs through the RTA,” he explains further.

Choosing between AMC, fintechs and brokers

There are different ways to invest in mutual fund schemes. You may directly visit the website of the AMC or you can approach fintech platforms such as Groww, Kuvera, FundsIndia or Zerodha Coin.

“A self-directed investor who has an understanding of mutual funds can directly invest from the website of the AMC, while you should go through an advisory platform if you want to explore more. The choice is contextual,” says Jain.

So far as MF buying from a demat account is concerned, it attracts additional charges, but gives you one-view advantage of stocks and mutual funds.

“There will be two costs if you hold MF units in the demat account – one, transaction cost depending on what the platform charges. Second, holding cost. If holding goes up after a certain threshold, NSDL and CDSL will levy some charges,” says Jain, adding that the benefit of having MFs in the demat form is you get to see your stocks and mutual funds at one place.