The two RTAs for the asset management companies in India are CAMS and KFin Tech.
As an additional verification, Amfi also suggested that the RTA take the necessary steps to verify that the contact details are accessible by sending an SMS/email directly to the unitholder. In case an electronic confirmation is received from the unitholder, the same will be considered as ‘verified’
“To the best of my knowledge, no such communication is yet received by the unitholders from RTAs," said Santosh Joseph, founder and managing partner of Germinate Investor Services."
Rushabh Desai, founder of Rupee With Rushabh Investment Services, believes that investors will be better off updating their contact details on the MF Central platform, even before any communication is received from the RTAs.
Amfi has also asked the RTAs to run a verification process in its system to detect if the contact details of the intermediaries such as MF distributors and registered investment advisors or their employees – are given while opening the MF account for their customers.
RTAs have to detect the seeding of the same contact details for more than one investor. But, there’s an exception to this. The contact details of MF accounts of family members can be the same, according to the circular. Family includes self, spouse, dependent children, dependent siblings, dependent parents, and a guardian in case of a minor.
In other cases where multiple investors with common contact details are detected, the RTA will request the investor to modify the contact details. Investors can also submit a declaration stating that the contact details belong to their families.
The contact validation process has to be completed by 30 September as per Amfi’s circular. What happens if the contact details are not updated within the due date is not very clear. Some experts think that the accounts of the unitholders could be frozen for transactions until the contact details are updated.
With the due date coming close, Chetan Gill, founder, The Wealth Mogul, said that the communication from almost all RTAs or the AMCs to the unitholders or the distributors haven’t started yet. “Most existing investors haven’t received online links for ‘family’ tagging or the forms for physical tagging of ‘family’ accounts are not available yet, with UTI Mutual Fund being an exception" added Gill.
Industry veterans believe this contact validation process will not be easy. “If logistically or practically, the regulator thinks that the spirit of the circular is difficult to be achieved in such a short time, there is a high probability for an extension of the due date," said Hemang Parekh, Partner at DSK Legal.
