Lost track of mutual fund units? Sebi moots MITRA to help investors reclaim inactive MF folios | Mint

Capital market regulator Securities and Exchange Board of India (Sebi) has proposed a platform to give relief to those investors who have lost track of their mutual fund investment.

By releasing a draft circular on Tuesday, Sebi has expressed the intent to launch a service platform, MITRA or Mutual Fund Investment Tracing and Retrieval Assistant, that will help investors trace their inactive and unclaimed mutual fund folios.

Investments in open-ended schemes may remain perpetually invested until the investor approaches the AMC concerned for redemption or transfer.

Due to the unavailability of PAN, email ID, or valid address, it is also possible that these folios do not show on the unitholder’s consolidated account statement. Therefore, inactivity in mutual fund folios could occur due to investors losing track of their investments or the demise of investors.

Such inactive folios may even become vulnerable to fraudulent redemptions. Sebi intends to launch the platform to resolve such problems.

What is an inactive folio?

An inactive folio is one in which no investor-initiated transaction took place in the past 10 years, but a unit balance is still available. Thus, inactive folios will include those in which the investor might have remained invested in an open-ended scheme and has either chosen not to redeem or simply might have lost track of the investment.

MITRA: Here are the key details

1. A service platform is proposed to be developed by the RTAs (Registrar and Transfer Agents) to provide investors with a searchable database of inactive and unclaimed mutual fund folios at an industry level. This platform will enable investors to identify overlooked investments or investments made by others for which they are the claimants.

2. The platform will also encourage investors to carry out KYC according to the current norms, thus bringing down the number of non-KYC-compliant folios.

3. The platform will work towards a reduction in the unclaimed mutual fund folios.

4. MITRA will also contribute towards building a transparent financial ecosystem and will be a reliable medium for investors to find their inactive or unclaimed mutual fund investments.

5. It also plans to build mitigants against the risk of fraud.

6. The platform will be hosted jointly by the two Qualified RTAs (QRTAs) — Computer Age Management Services Limited (CAMS) and KFIN Technologies — as agents of AMCs and available through a link on the website of MF Central, AMCs, AMFI, the two QRTAs and Sebi.

7. Sebi also recommended that AMCs, QRTAs, AMFI and mutual fund distributors spread awareness about this initiative among the investors.