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Last Updated : Mar 24, 2020 02:29 PM IST | Source:

Coronavirus impact| Online MF platforms capitalise on Amfi directive to stop physical transactions

One can buy mutual funds units through online platforms just like company stock. To avail this facility, one must complete a one-time online registration on the platforms.

Representative image
Representative image

With COVID-19 worries rising in Mumbai, the country's financial capital, the state government has imposed a shutdown of shops and offices, except those providing essential services.

The complete lockdown impacted the mutual fund sector too and the Association of Mutual Funds in India (Amfi) directed mutual fund houses to close their collection centres and branch offices. This may prompt most investors to turn to online platforms for any transactions.

To encourage social distancing, the mutual fund lobby group has halted the offline mode of investing in mutual funds through banks, AMC offices and Registrar and Transfer Agent (RTA) offices.

In a directive issued on March 22, AMFI said, “Under the circumstances, as a social-distancing measure to ensure the safety of investors, distributors, visitors and the employees of the mutual funds and their RTAs, all mutual funds shall keep their collection centres/branch offices (official points of acceptance) closed with effect from Monday 23rd March 2020 and allow only online transactions through various electronic modes, such as mutual fund websites /web-portals / various digital platforms /apps or virtual channels etc. till the situation comes under control and until social distancing advisory is withdrawn by the authorities.”

The directive has opened up an opportunity for online platforms to increase their investor base.

Some of the mutual fund platforms in India are Kuvera, Goalwise, AMFI’s Mutual Fund Utility, NSE – MFSS and BSE - StAR MF, PaisaBazaar, Zerodha, PayTM Money, Groww and Clearfunds, among others.

“Now is a great time for such investors to transition to the online route and keep their investments running,” said Harsh Jain, Co-Founder and Chief Operating Officer, Groww, an online mutual fund platform.

Also, platforms are easy to use, as right from onboarding to investing the process is very streamlined and can be understood easily by anyone.

Investors can also track all their external investments on the platform as well and keep an eye on their portfolio as a whole. 

Echoing Jain’s view, Sousthav Chakrabarty,  Chief and Director, Capital Quotient, an advisory platform for stocks and MFs, observed, “A lot of clients may be first-time users to online platforms, and since these are monetary transactions they may hesitate to do them on their own. We have an option where a customer can get in touch with an advisor and in real-time seek help in placing the transaction over a WhatsApp, Zoom or Skype call, while the advisor guides through every step of the journey. This helps in addressing any hesitations or worries that customers might have in doing their first online transaction.”

Keeping in mind the immense load on technology, online investment platforms are going the extra mile to ensure the investors' interest and are increasing their productivity by heavily investing in the technology to double their output for investors.

“We have a scalable technology architecture that we use to serve our customers. Hence, the increase in demand can easily be satisfied through an increase in the number of client-facing systems that we have deployed in real time, "Chakrabarty said.

Some online platforms have already started seeing a surge in traffic on platforms.

”Since Amfi has stopped all physical transaction in MFs we have seen a surge in investors coming to our platform to quickly transact online in their existing portfolios,” Gaurav Rastogi, Founder and  Chief Executive Officer, Kuvera.

Even though exact numbers are unavailable on how many transactions are done via online platforms, most investors are comfortable doing transactions offline.

How to register

Before investing in a mutual fund scheme, whether through online mode or via conventional paper-based mode, one must first complete the KYC process by filling up the prescribed KYC form.

KYC stands for "Know Your Customer" and is a term used for Customer Identification Process as a part of the account opening process with any financial entity. KYC establishes an investor’s identity and address through relevant supporting documents such as prescribed photo id. (e.g., passport, Aadhaar or PAN card) and address proof.

KYC compliance is mandatory under the Prevention of Money Laundering Act, 2002 and Rules framed thereunder.

One can buy mutual funds units through online platforms just like company stock. To avail this facility, one must complete a one-time online registration on the platforms.

The demonetisation had pushed a lot of financial transactions online. Ironically, physical shutdown owing to COVID-19 could be the second push towards the digital world of financial transactions.

Nearly 500 coronavirus cases have been reported in India so far, according to the health ministry data on March 24.

As cases of the viral infection surged, authorities have put almost the entire country under lockdown, banning gathering of people and suspending road, rail and air traffic till March 31.

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First Published on Mar 24, 2020 02:28 pm
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