In a country where English is spoken only by the elite, SEBI has done another very unnecessary thing. However, I am not criticising the regulator, just stating the facts.
SEBI in its wisdom decided that all mutual fund accounts in which there has been no activity for the past 6 months will be called dormant. Fantastic, classify it. What is the earth shattering need to write to the unit holder (at his expense – legally required letter) and tell him his account his dormant? No clue.
But when a regulator says something, you do it. So a huge expense was incurred intimating all the people that their account is now dormant. I have accounts like Franklin India Bluechip / Franklin Tax shield where I have invested 10 years ago. Luckily I guess I know that dormant – does not mean the fund manager has gone to sleep.
So there has been a panic by investors, IFAs have come together to issue a clarification…..but the damage has been done. Business Standard has done an article, not sure where else I saw an article, but yes the media has made some noise about it, generally.
But it has had a good effect also. A friend called to say ‘I suddenly found a statement showing Rs. 93,000 in a fund…what should I do?’ I said redeem it and put it into one of the funds in which you are doing a SIP..makes no sense to keep in a place where you do not know what is happening.
That brings us to a question. If a customer has invested in a growth scheme, has changed house, had not given his PAN number and then died – what happens to the money? It is jam money for the fund house. They can always it is a liability (it is) and not worry about it at all.
If at all Sebi should FORCE asset management companies to update ALL FOLIOS with the latest address, Kyc, nomination, etc. – in fact it should be an industry wide exercise and Cams and Karvy should BE FORCED to do this.
Who will bear the cost of this exercise? the asset management companies – out of the TRAIL commission that they have saved. Those folios where the owner cannot be found there should be a news paper ad….if there is still no response…the money should be redeemed and kept in a bank account earning interest of say 5%p.a. ….after another 5 years it should be transferred to a SEBI’s investor education account.
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