A number of steps need to be taken to simplify various procedures which are bogging down the industry, says Pune-based advisor Hemant Shah.
KYC norms
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.
Minor to major
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.
Bank mandate
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.
IFA education
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.
Better branch network
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.
Complexity of schemes
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.
Governing body
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 industry.
(Do you have any
suggestions to simplify procedures in the MF industry? Do write in).