This facility is convenient as investors can buy or redeem mutual fund units instantaneously without any paper work.
To increase penetration of mutual funds and make investments more convenient, fund houses have started to offer a dedicated mobile platform for mutual fund transactions.
But this application failed to catch the small investor’s fancy as one needed a smart phone to use this facility.
To address this limitation, fund houses have now introduced the SMS transaction facility.
This allows investors to buy or sell mutual fund units by just sending an SMS. The concept is still evolving, as only select fund houses offer this facility currently. However, many other fund houses are working on this application and are likely to launch it in the near future.
Here are the answers to some questions that you may have regarding this launch.
Which fund houses currently provide this facility?
Three fund houses Reliance Mutual Fund, IDFC Mutual Fund and DSP Blackrock Mutual Fund offer this service. However, IDFC and DSP Blackrock currently offer this facility only for one fund. But, they may eventually extend this to other schemes too. Other fund houses such as ICICI Prudential are also working on rolling out a similar facility.
Is it available to all investors?
Existing mutual fund investors who intend to buy additional units or sell units can do so by just sending an SMS to the number identified by the Asset Management Company (AMC). First time investors can sign up for the facility once they have a folio number created with the fund house.
How do I sign up for this facility?
You should contact the nearest investor service centre of the AMC and complete the ‘one time debit mandate’ form.
This will authorise the AMC to issue debit instructions to the bank, based on your standing instructions.
Post confirmation from the bank, your mobile number as mentioned in the debit mandate will be recorded as the registered number for this facility.
The AMC will tag the folio number with your mobile number.
Once the registration is complete, you can transact using this facility by sending an SMS to the designated number in the AMC prescribed format.
How do I buy or sell units using my mobile?
For instance, if you have invested in Reliance gold savings fund with a growth option, and intend to purchase additional units for Rs 25,000, you will have to type PUR (space) 25000 (space) GDGPG and send to 9664001111.
The request is considered as accepted only after you receive a confirmatory SMS from the registrar and transfer (R&T) agent. In case you don’t receive a confirmation, you can call the toll free helpline of the AMC.
Remember that the SMS should only be sent from the mobile number registered with the AMC.
How long will the AMC take to process my redemption or purchase request?
From the time of receipt of confirmation from the R&T agent, the redemption proceeds will be credited in your account within 10 working days. The time of registration of request with the R&T agent will be considered for assessing the applicable NAV.
How does this benefit investors?
This facility makes mutual fund investment more convenient. In the conventional system, investors will have to submit a duly-filled form for additional purchase or redemption and submit the same at the nearest investor service centre of AMC branch. But, under this facility, investors can buy or redeem units instantaneously without any paper work.
Does the AMC have adequate controls in place in the event of a misuse or theft of my mobile phone?
Once the purchase or redemption request is made, the registrar and transfer (R&T) agent will send you a confirmatory message.
In case of an erroneous request or misuse of your mobile, you can request the AMC to cancel the transaction request.
While the AMC may cooperate with the investor to resolve any such issue, investors can not hold the AMC responsible and claim any damages.
What the shortcomings of transacting through SMS?
In addition to risk of misuse in the event of theft, technology risk such as virus attack on the software enabling SMS transaction remains a concern. In case the transaction is delayed or not effected on account of non-receipt of message or incomplete information, the investor cannot hold the AMC responsible.
While SMS facility eases the investment process, investors may still have to rely on an advisory to make an investment choice.
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