While, it has been more than seven years since online transactions became possible, physical transactions continue to dominate with 70% of count of such transactions, says a Karvy report.
The rest of 30% transactions in mutual funds come from banking channels, AMC websites and online exchange platforms like BSE Star MF and NSE NMF-II.
The report found that online transaction contributes less than 1% in terms of value. However, contribution from online channel stood at 12% if we look at number of transactions.
Sharing his views on online transactions in the MF industry, Vinod Jain of Jain Investments said that there is an increased interest in doing online transactions. “The interest in online transactions has steadily increased in the past few years, but physical transactions have been around for longer. So many investors may choose physical transactions due to familiarity. But I see the tide gradually changing towards online transactions,” he says.
According to Kunal Bajaj of Clearfunds.com, an online investment portal, the popularity of an online platform stems from people’s trust in the medium. “Online platforms are picking up, but there are many restrictions in conducting high value transactions. For example, there is limit of Rs.2 lakh for net banking transactions in mutual funds. Therefore, even if a client wants to do a transaction of a higher denomination, he is unable to do it. To overcome this barrier, we ask our clients to sign a bank mandate, which helps us transact up to Rs.1 crore through Electronic Clearing Service on their behalf,” he says.
In terms of value, close to 99% transactions is physical. The report makes it clear that most people still prefer to carry out high value transactions using the physical mode of transacting only.
