SEBI Plans ‘MITRA’ Platform to Help Investors Find Inactive Mutual Fund Folios

The Securities and Exchange Board of India (SEBI) has proposed a platform to help investors trace their inactive mutual fund folios. In a consultation paper released on December 17, SEBI introduced the idea of Mutual Fund Investment Tracing and Retrieval Assistant (MITRA) to address the issue of unclaimed and inactive mutual fund investments.

According to SEBI, inactive folios refer to those where no investor-initiated transactions (financial or non-financial) have occurred in the last 10 years, but units are still available in the folio.

Why SEBI Proposed MITRA?

SEBI said, “Most mutual fund investors over time lose track of their investments. This is more so in the case of investments made in physical form and with less detail of KYC. Such investments are usually made in growth-option schemes, which remain forever in that state unless reclaimed by the investor, the nominee, or the legal heir.

The consultation paper pointed out that lack of information relating to PAN, email ID, or valid addresses, etc., may lead to their non-appearance in the investor’s CAS. In such instances, the folios become potential targets for fraudulent redemptions.

The proposed platform would be developed by registrar and transfer agents and will allow investors to track unclaimed folios across the mutual fund industry.

Key Benefits of the Platform

1. Track Overlooked Investments: Investors can identify their forgotten investments or those made on their behalf for which they may be rightful legal claimants.
2. Encourage KYC Compliance: Investors will be motivated to update their KYC as per current norms, reducing the number of non-KYC compliant folios.
3. Reduce Unclaimed Folios: The platform will help reduce the number of unclaimed or inactive mutual fund folios.
4. Enhance Transparency: The system will build a transparent financial ecosystem, offering a reliable tool for tracing inactive investments.
5. Fraud Mitigation: It will incorporate measures to reduce the risk of fraudulent redemptions.

SEBI has invited public suggestions and feedback on this proposal until January 7, 2025. If implemented, the MITRA platform is expected to empower investors, improve transparency, and streamline the mutual fund ecosystem.

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_{^{Source: Moneycontrol}}