The new framework introduced by the Securities and Exchange Board of India (Sebi) allows investors to freeze their mutual fund folios so that no units can be redeemed, switched, or otherwise debited until the lock is removed.
Also Read | 25 equity MFs deliver over 25% in April; Nippon India Taiwan Equity Fund tops list. Will momentum continue in May? The facility applies to both demat and non-demat mutual fund holdings, meaning it covers folios held in demat accounts as well as those maintained directly with asset management companies (AMCs).
The locking facility will initially be made available through MF Central, an interoperable digital platform used by investors to manage mutual fund transactions and service requests across different fund houses
The fund house to introduce this facility as of now include – 360 One Mutual Fund, Baroda BNP Paribas Mutual Fund, PPFAS Mutual Fund, Franklin Templeton Mutual Fund, Groww Mutual Fund, Helios Mutual Fund, ICICI Prudential Mutual Fund, ITI Mutual Fund, JM Mutual Fund, LIC Mutual Fund, PGIM India Mutual Fund, Samco Mutual Fund, Shriram Mutual Fund, Trust Mutual Fund, WhiteOak Capital Mutual Fund.
Applicability and who all can execute
The facility is available for Resident and Non-Resident Individual Investors including Minor Folio held through a Guardian. The facility to lock / unlock will be available only to the first / sole holder in the folio, held in single and anyone or survivor basis and this will also be available to minor account which will be exercised by guardian till age of maturity and after obtaining maturity, lock/unlock will be exercised by the unit holder only.
Basic requirements
The facility shall be enabled only for KYC complied (Registered / Validated) investors having valid Email ID and Indian Mobile number registered in the folio (both mandatory).
Options for locking / freezing
The investors will have the option to lock any or all of these transactions in the folios selected for locking: Lock only debit transactions (investor initiated) or lock debit + non-financial transactions (investor initiated).
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Process for locking/freezing the folio/s for units held in non-demat mode
The process for locking or freezing the folios for units held in non-demat mode includes six steps to follow. Firstly the investor(s) will log-in to MF Central portal after completing all applicable log-in validation processes which includes providing PAN + email ID / mobile number, OTP based authentication to the email ID/ mobile number.
Secondly, on successful validation, investors will be provided with details of all his/her holdings viz., fund name, scheme, outstanding units and value of units (basis last available NAV) held in SoA form. Thirdly, the investors will select the option to lock the transactions.
Fourthly, the investor will select the fund name and folios that he/ she chooses to lock, followed by once selected, OTP would be sent to the registered mobile number / email ID and upon successful validation of OTP, MF Central will send the requests to the respective RTA who would lock the folio and send confirmation to investor.
Lastly, the lock would be marked in the select folio(s) in the RTA database instantly for holdings held in SoA form.
Process for unlocking the folio/s for units held in non-demat mode
The process for unlocking the folio/s for units held in non-demat mode also includes six steps to follow. Firstly, the investor(s) will log-in to MF Central portal after completing all applicable log-in validation processes which includes providing PAN + email ID/ mobile number, OTP based authentication to the email ID/ mobile number.
Secondly, on successful validation, investors will be provided with details of all his holdings viz., fund name, scheme, outstanding units and value of units (basis last available NAV) held in SoA form. Thirdly, the investors will select the option to unlock the transactions and then the investor will select the fund name and folios that he/ she chooses to unlock.
The fifth step requires two levels of authorization to be mandated by sending different OTPs to the registered mobile number and email ID and both should get validated. And lastly, after successful validation, MF Central will send the request to the respective RTA who would unlock the folio(s) and send confirmation to investors.
Process for locking the folio/s held in demat mode
MF Central will provide an option for the investor to lock holdings held in demat account by redirecting investors to online services offered by respective depositories.
Transactions allowed when folio is locked
Once the folios are locked, these non investor‑initiated transactions such as Address updation via KRA feeds, IDCW Payout/ Re-investment, and any action as required to be taken to adhere to the request/ orders received from Regulatory Authorities are permitted.
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Transactions allowed only after unlocking the folios
Around 14 types of transactions will be allowed only after unlocking the folios. These transactions include financial and non-financial transactions. The financial transactions include redemption, registration of STP, registration of SWP/STP, and switches.
The non-financial transactions include change/ addition of bank mandate, change of broker code, change of E-mail ID and/ or mobile number, nominee registration/ cancellation, change in IDCW option, lien marking, change in signature, consolidation of folios, transfer of units and change of tax status.
Note: Existing registered SWP/STP/DTP (before lock) will continue. All other transactions remain unaffected. All other transactions remain unaffected unless specified above.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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