A mutual fund is a financial vehicle comprising of a pool of money acquired from many investors to be invested in marketable securities like bonds, stocks, and money market instruments. These are managed by professionals. Investors go for investing in mutual funds mainly due to professional management, diversification, and liquidity reasons.
Securities and Exchange Board of India is the regulator of the securities market in India. SEBI primarily aims at protecting the interests of securities investors, promoting the securities market, and regulating it.
Currently, if a mutual fund investor has to amend his credentials like bank details or contact details in all his MF holdings, he has to submit documents for each scheme. This is a tedious process for any investor. Acknowledging the difficulty of the present process, the Securities and Exchange Board of India proposes to launch a single platform for all mutual funds-related non-financial transactions. These transactions include updating mobile numbers, addresses, and email, tracking queries, accessing investment-related reports, in the initial phase of the project. SEBI proposes to extend this further to the purchase and redemption of mutual fund units. Here, investors have to just submit documents once, saving them time and effort.
The platform would be developed by the Registrar and Transfer Agents (RTA), comprising of the dual giants, Computer Age Management Services and KFin Technologies, delivering an integrated experience to investors. SEBI has asked all Asset Management Companies to share their data feeds to the proposed platform and also between themselves for creating investment-related reports.
The initial phase of the proposed project is expected to be completed by December 31, 2021. Gradually, the platform would be subject to modification and expansion to provide services to AMCs, stock exchange platforms, and digital platforms for transacting in mutual funds.
Does this come as a competitor to fintech firms? Currently, fintech firms extend their platform to invest in mutual funds schemes free of cost. Fintechs monetize their business through cross-selling of other financial products. In short, this single window platform would certainly appear as a competitor to existing fintech firms.
Experts opine that such a consumer-facing single window can ease navigation and enhance the ease of investing.