SEBI Announces MITRA Platform To Trace Inactive And Unclaimed Mutual Fund Folios

The Securities Exchange Board of India (Sebi) said in a circular that it plans to launch a new platform called MITRA (Mutual Fund Investment Tracing and Retrieval Assistant) to help investors trace inactive and unclaimed mutual fund folios.

The market regulator said that over a number of years, investors lost track of their investments, considering some mutual fund investments were made in physical form or with bare minimum KYC details. Additionally, such investments if made in open-ended growth option mutual funds may remain invested perpetually until and unless the investor or their nominee approaches the Asset Management Company to stop the investment.

“Over a number of years, Mutual Fund investors sometimes lose track of their investments considering investments might have been made in physical form with bare minimum KYC details. The investments in open- ended growth option mutual fund schemes may remain invested perpetually until and unless the investor/his nominee/legal heir approaches the concerned AMC for redemption/transfer/transmission,” Sebi said.

The Sebi highlighted that such inactive mutual fund folios are also prone to fraudulent activities. Additionally, the unavailability of the investor’s PAN, email or valid address may result in the folio not reflecting in the unitholder’s Consolidated Account Statement (CAS).

“Due to non-availability of PAN, email ID or valid address it is also possible that these MF folios may not appear in the unitholder’s Consolidated Account Statement. Thus, inactivity in Mutual Fund folios could be on account of the investor losing track of his/her investment, demise etc. Such inactive folios may become susceptible to fraudulent redemptions,” Sebi said.

How Can MITRA Platform Help Investors

Sebi said in its circular that the MITRA platform has been developed by Registrar and Transfer Agents (RTAs) to provide investors with a searchable database of both inactive and unclaimed mutual fund folios at an industry level.

The platform aims to enable investors to identify the overlooked investments or any investments made by any other person for which he or she may be the rightful legal claimant. The platform also aims to encourage investors to do KYC as per the current norms reducing the number of non-KYC compliant folios. The market regulator also said that the platform can potentially lead to a reduction in the unclaimed mutual fund folios and contribute towards building a transparent financial ecosystem and will be a reliable medium for investors to find their inactive and unclaimed mutual fund investments, build and incorporate mitigants against fraud risk.

When Is A Mutual Fund Folio Declared Inactive

As per the circular, an inactive folio is one where the investor has not initiated transactions (financial and non-financial) in the last 10 years but a unit balance is available. Inactive folios will also include folios where the investor might have remained invested in an open-ended scheme and has either chosen not to redeem or simply might have lost track of the investment.

The MITRA platform will be hosted jointly by the two Qualified Registrar and Transfer Agents (QRTAs) and can be accessed through the Computer Age Management Services Limited (CAMS) and KFIN Technologies Limited as agents of AMCs and available through a link on the website of MF Central, AMCs, AMFI, the two QRTAs and Sebi.

The Sebi also urged AMCs, QRTAs, RIAs, AMFI and Mutual Fund Distributors to create awareness about the MITRA initiative. The regulator has also asked QRTAs to make the MITRA platform operational within 15 working days of issuance of the circular, a beta version of the platform will be launched in 2 months.