These banks were charging a transaction charge from their investors earlier but have opted out now.
Two leading distributors of mutual funds, Standard Chartered Bank and SBI have opted out of transaction charges.
Distributors are allowed to change their status between March 1st to March 25th and September 1st to September 25th every year.
Standard Chartered Bank is the fifth largest mutual fund distributor having earned Rs. 76.63 crore commissions in FY 2010-11. The tenth largest distributor, State Bank of India earned Rs. 37.64 crore commission during the same year.
“They must have decided that it’s not a good idea to charge customers. Eventually most of the banks could opt out of transaction charge as there are many operational issues,” says a marketing head of a leading fund house.
Few banks have not changed their stance on transaction charges. Private banks like Axis, HDFC and ICICI have continued to ‘opt in’ while banks like Citibank, Kotak Mahindra and Deutsche have continued to opt out of transaction charge.
Distributors are entitled to a transaction charge of Rs. 100 for existing investors and Rs. 150 for new investors. Around 6,000 out of the 40,000 KYD complaint ARN holders had opted in for transaction charge when it was introduced.
