A number of steps need to be taken to simplify various procedures which
are bogging down the industry, says Pune-based advisor Hemant Shah.
There have been multiple amendments to KYC norms, and
this flip-flop in regulations is choking investments. Multiple KYC norms,
amendments in application forms and change in various processes are frustrating
market participants. This process should be streamlined and the lacunae should be
eliminated. In case the KYC application is rejected, the investment process
should not be frozen, but the investor should get the chance to hold on to the
investment while the application is re-submitted.
That is because once a KYC application is rejected, it
is very difficult to keep a client interested in investments.
When a minor becomes a major, the procedure for change
of status is very cumbersome and expensive. Since the minor’s PAN number
remains the same, upgrading of KYC for the minor (after becoming an adult)
should be an automatic process.
A number of investors who started their investments
around a decade ago have only recently moved to core banking. They have to go
through a longwinded procedure for change of bank mandate because their account
number has changed from a 5-digit to a 16-digit number. But details of the bank
remain the same. For such investors, the procedure should be simplified.
Continuous education programmes should be in place for
IFAs. Each advisor will then always be updated on the latest changes in
industry norms or investment procedures.
Cities like Pune have seen major growth, but offices
of AMCs are concentrated in a few business districts. AMCs and R&T agents
should be encouraged to set up more branches to service investors effectively.
If these basic issues are sorted out, it will usher in
a level playing field for all players in the MF industry.
Cut down on the number of schemes that are being
offered by various AMCs. Too many schemes confuse the investor. Often, an AMC
offers a number of schemes which share the same investment objectives. These
schemes should be merged in the interest of the investor community.
If an AMC has merged one scheme with another, it
should not be permitted to float any new scheme in the same category for three
years. This will also help the AMC since it does not have to incur additional
costs in handling multiple folios with a single investor, for similar funds.
SEBI is the governing body for mutual funds, but the
government could look at forming a regulator which will focus solely on the MF
industry. This will benefit the AMC, the distributor and the investor. All
three parties are crucial for development of the fund industry. A specialized
body will be in a better position to pass regulations that benefit the
(Do you have any
suggestions to simplify procedures in the MF industry? Do write in).