One of the biggest concerns of MFDs that has come to fore especially during covid times is the existing nomination process.
Currently, MFDS have to submit a physical nomination form at the fund house level. There is no centralized and online system to make nomination against ARN. In addition, making changes in nominee details entails a complicated offline process.
Considering the plight of MFDs, AMFI has been actively exploring if they the industry body can introduce a centralized nomination facility for MFDs. In fact, AMFI is in discussion with a few entities to understand legal aspects of the centralized nomination facility, said two senior officials who are the members of AMFI ARN committee.
One of the members said that the centralized nomination might involve legal challenges. “Currently, distributors and AMCs enter into a bilateral contract at the time of empanelment. AMFI has no role to play here. Another issue with the centralized nomination is that who will held responsible if a legal heir of a deceased MFD challenges nomination in the court of law. Hence, AMFI is exploring legal aspects of the centralized nomination before it gets implemented.”
Talking about the legal aspects, a senior MF official said, “It's a noble idea worth considering. The ARN committee is looking into it. But it's not easy due to multiple factors. First, allowing MFDs to register different nominees for different AMCs is not easy through a common portal. Just like it is not easy to have a centralized process for registering and changing nominees for all bank accounts. Second, as AMCs and MFDs have a contractual relationship, bringing new nomination process will have legal connotations. Third, a common empanelment form can be one way of making this possible but that is tough as different AMCs have different terms and conditions on their empanelment forms. It's difficult to design a form that meets internal guidelines and regulations of all AMCs.”
Currently, many AMCs have been reaching out to distributors to complete their nomination. “We have been reaching out to all our partners to complete the nomination process. It is a good idea to complete the nomination process at fund level as the centralized nomination may take time,” said another member of the AMFI committee.
Cafemutual urges MFDs to complete nomination against their ARN at the earliest.
