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Monday, December 29, 2014

SEBI to form digitalization committee for MFs

The committee will advise SEBI on how the mutual fund industry can leverage technology to reach out to investors. 

Market regulator SEBI is learnt to be in the process of forming a ‘digitalization committee’ which will advise SEBI on penetrating mutual funds through new age technology. 

The ‘digitalization committee’ will consist of senior MF industry executives including SEBI officials, sources said. The idea was mooted by SEBI at a recent SEBI MF Advisory meeting held in Mumbai. 

The committee will advise SEBI on how the MF industry can leverage technology like internet, mobile phone, stock exchange platform, etc. to reach out to investors. 

While fund houses allow investors to transact through their websites, the inflows from this route is not significant.  Some fund houses have started facilitating transactions through mobile phone apps. 

In its long term mutual fund policy for mutual funds, SEBI has urged AMCs to enhance their online investment facility and tap internet savvy users. “Mutual funds need to tap the burgeoning mobile-only internet users for direct distribution of mutual fund products,” states SEBI’s long term policy for MFs. 

So far, mutual funds have traditionally been sold through the brick and mortar branches of national distributors, banks and feet on the street IFAs, who continue to bring majority of inflows. 

Going by the people’s increasing acceptance of e-commerce, financial advisors believe that mutual funds will also be bought the same way in future. “The younger generation is more comfortable with the online medium. People are buying tickets, shopping and selling their stuff online. Technology can be a great tool to reach out to more investors,” says Hemant Rustagi of Wiseinvest Advisors. 
 
However, he says that the industry needs to first ease the operational difficulties faced while investing in mutual funds. “Bank KYC should suffice for investing in mutual funds. The first transaction requires investors to submit physical documents which becomes a hindrance. So, technology can have its limitations. The process has to be completely paperless for the technology to gain acceptability. Also, distributors are required to perform in-person verification (IPV) of clients which poses a hindrance in acquiring outstation clients,” Hemant points out.  

Source: Team CafeMutual
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