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Ever since AMFI allowed AMCs to pay trail commission to MFDs if a client transfers his assets from one MFD to another, a few bank employees have been reportedly asking investors to transfer their AUM to the bank to avail the loan against mutual funds.
A Mumbai MFD requesting anonymity told Cafemutual that one of his clients bought a house for which he required loan of Rs.15 crore. However, his loan eligibility was lower than the required amount.
He said, “I recommended to him that he should either redeem his money from mutual funds or take loan against mutual funds as it is better than unsecured loan. When the client approached the bank for loan against mutual funds, the bank employee asked him that he needs to transfer his MF AUM in bank’s ARN to avail the loan against mutual funds. Since the client was in urgent need of money, he transferred the assets in bank’s ARN to avail the loan.”
The MFD took the matter with the AMFI ARN committee and a few CEOs. The trade body may deliberate on this issue to ensure that no one takes undue advantage of the new assets transfer norms.
According to the new norms, AMCs can only pay trail commission after cooling off period of six months from the date of transfer of assets by investors.
This came after AMFI received requests from many MFDs to review the previous ARN transfer norms which did not permit AMCs to pay trail commission to the new distributor if an investor initiates transfer of his assets to the new MFD.
