So far, AMCs
have classified investors as ‘dormant’ in common account statements if they had
not transacted for a period of six months. Now AMCs are planning to classify
such accounts as ‘inactive’ and do away with the term ‘dormant’ so that
investors don’t worry.
houses had issued common account statements (CAS) to investors in March 2012 as
per SEBI’s direction. Through CAS, AMCs were asked to notify those investors who
had not transacted for six months or more.
the way bank and trading accounts become inactive if your clients don’t
transact for a long time, mutual fund folios are also tagged as ‘dormant’ by
AMCs now. Registrars tag folios as ‘dormant’ if there are no transactions for
six months. Dormant just means that your investors have not transacted in a
particular folio for the above period.
few IFAs say that their clients who have received such statements had
interpreted the term ‘dormant’ incorrectly. “Some of our investors got worried over
whether their money is safe,” says an advisor from south India.
are now planning to term these folios as ‘inactive’ in order to dispel the confusion
in the minds of distributors and investors.
term dormant account has created confusion among some distributors. They are
actually inactive accounts. We will change the terminology for the subsequent
account statements,” says a chief operations head of a leading fund house.
investors don’t need to panic if the account statements reflect a dormant
status. You just need to tell your clients to initiate a transaction to reactivate