Skip to main content

Aadhaar linkage order burdens AMCs

Aadhaar linkage order burdens AMCs
Asset management companies (AMCs) are feeling the burden of the Association of Mutual Funds in India’s (Amfi’s) decision to make the Aadhaar citizen identification mandatory for investment. 
From January 1, Aadhaar details of customers, including existing ones, are to be mandatory for investment in MFs. Insiders told Business Standard this was an order to Amfi from the Union ministry of finance. "We just passed this on as an official communication to members," said an Amfi board member. He added no AMC was in favour, as this puts the onus on them to link Aadhaar. 
Most top officials preferred anonymity, as they did not want to be quoted against the new rules of the game.
Swarup Mohanty, chief executive officer (CEO) of Mirae Asset, says, "The task of getting all investors to list their Aadhaar number with us is big. Failing which, the folios would enter into a freeze zone and no transactions would be allowed. We have started the process from this month and are already seeing a fair number of upgradation. So, by December, we are hopeful that the bulk of our folios would get Aadhaar details listed."
What has irked officials the most is the responsibility imposed on fund houses to adhere to the new norms. More so as in the past few years, there have been numerous changes in the Know Your Customer (KYC) requirements for investors.
"We have no problem if Aadhaar is linked with investors' accounts. But, asking us to ensure this, for all the existing clientele as well, is not easy. Then, what's the use of a central KYC when individually every financial sector has to do it time and again," questioned a CEO of a large fund house.
He says there were other ways to implement this. As almost all money which flows into MFs through banking channels and customers are already linking their Aadhaar details with banks, it would have been better if the data could be sourced from the banks or the central KYC agency, he suggested.
Several fund houses are not limited to urban centres — they have been penetrating elsewhere, too. Investors in urban centres are more likely to update the required details in time, unlike those in rural and semi-rural territories.
"Investors could face inconvenience as accounts without Aadhaar linkage will get frozen. 
This way, we are forced to deny investors from being able to withdraw their own money when in need until Aadhaar is linked," says a top MF official.
Distributors, individual financial advisors, registrar agents like Karvy and CAMS, and fund houses' own offices would have to be massively engaged in the process to get the job done on time. 
Sector executives put the individual number of investors in mutual funds at about 10 million. The folio counts is over 60 million, while systematic investment plan accounts are 16.6 mn.
The Business standard, New Delhi, 31th October 2017


Popular posts from this blog

RBI rushes in to prop up falling rupee

RBI rushes in to prop up falling rupee India’s central bank reportedly intervened in the currency markets on Monday to prevent a further slide in the local unit, which breached the 67 mark to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Some state-owned banks were seen selling dollars aggressively, interventions that market dealers attributed to the central bank’s strategy to stem the decline of the Indian rupee against the US currency. The rupee is the worst performing among a dozen Asian monetary units in the past three months. It lost 4.25 per cent to the dollar during the period, show data from Bloomberg. On Monday, the Reserve Bank of India (RBI) is said to have sold about Rs 800 million collectively on the spot and exchange traded futures markets, dealers said. An email sent to RBI remained unanswered until the publication of this report. The currency market has seen such a strong central bank interven…

GST Refund of Rs 20,000 Cr Pending: Exporters’ Body

GST Refund of Rs  20,000 Cr Pending: Exporters’ Body Refund of over Rs 20,000 crore on account of Goods and Services Tax (GST) is pending with the government with more than half the amount stuck as input tax credit, Federation of Indian Export Organisations said on Tuesday. While claims over Rs7,000 crore were cleared in March, the amount was Rs 1,000 crore in April.However, after exporters’ request, the GST council and tax department are organizing a second phase of Special Refund Fortnight starting May 31, which will enable exporters to draw their refunds at a speedy pace. Many exporters have been unable to file the refund of input tax credit due to technical glitches, exports and claim happened in different months. The major challenge lies on ITC refund especially because the process is partly electronic and partly manual which is cumbersome and add to the transaction cost, the exporters’ body said. On IGST, refunds are getting delayed due to airline and shipping companies not submitt…

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…