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15 May 2012 11:11 AM
Does your client have a ‘dormant’ MF account? Don’t panic  
Ravi Samalad
 

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.

Fund 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.

Just 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.

A 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.

AMCs are now planning to term these folios as ‘inactive’ in order to dispel the confusion in the minds of distributors and investors.

“The 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.

Your 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 the account.

 
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