Mutual Funds have been present in Indian Economy for a long time now. Since its introduction, the market has been flooded with fund houses and their funds. On the investor side, we’ve seen an investor hold a portfolio of multiple funds from various fund houses. Hence, there could be several instances when an investor needs to interact with the fund house representative regarding operational processes. These processes change as per the RBI guidelines. Redemption of funds is one such process. This post will describe the various options that could be available at fund houses for redemption. Though the process description is very basic; the story behind writing this post is certainly more interesting and worth a read to understand the importance of redemption process. The story is covered in the latter part of post.
From what started as manual form submission has evolved to telephonic and online fund redemption. Some of these landmarks were achieved because of regulatory enforcement and some adopted for better customer experience and efficiency gains including reduced request turn-around time. Though various fund houses have more than one option to process a fund redemption request; online processing is our choice.
Online processing requires an investor to set up an account on the respective website. This is a one-time task and a cake walk for anyone who is aware of web. Once you’ve setup your account and login; you can view your funds listed. This may not be true for all fund houses and you may need to add the funds(manually) you’ve invested in. Once you view the funds, you can very easily avail various options listed online and redemption is one of them. The entire online account setup gives you the following benefit:
- Ease & Convenience.
- Safe & Fast Option.
- No Statement request required.
- Perform operations online like Redemption.
- View Analytic graphs describing the performance of fund.
Following are some links i referred for online transaction:
- DSP Blackrock : https://dspbronline.com/
- IDFC Mutual Fund : http://www.lntmf.com/
- L&T Mutual Fund : http://www.lntmf.com/
As mentioned about the constant changes been made with regard to processes, the fund house might consider mobile applications as next step. Till then, online stands the best option and may be after that as well. And now, I detail the story behind this entire setup of online processing account.
How Formula 1 Car Racing Relates to Mutual Funds Online Accounts
The title sounds weird but it’s justified. It happened in 2011 when India was about host the inaugural Indian Grand Prix. Being a formula 1 fan for more than a decade; missing it would be sinful. So, I decide to book a season ticket and parking slot for myself; costing me Rs.11000. For some, this sounds completely unreasonable but never for a formula 1 fan. Anyways, I make the payment via my credit card thinking that I will redeem my mutual funds for payment next month. The race goes well and its super fun. Next month is here and my credit card payment is due.
So I fill up the manual redemption form and submit to the fund house. Couple of days later, I get a love letter from them stating that the signatures are not matching. Redemption request declined. Signature mismatch is a common problem with many and I was no exception. This is certainly possible as one would have invested in a fund many years before he/she requested for redemption. The signature may change over this period. So, I ask the fund house as the next steps. They ask me to get the signature updated and then request again. Then I submit the signature change application form. This gets rejected too. I couldn’t believe my eyes. I went and checked the “Black Label” bottle in my cupboard and it was sealed. Ok, I am in my senses :). I go ahead and read the love letter; yet again. It said the request for signature request declined because of signature mismatch. Apparently, the signature on the application form was not matching with the PAN card. Damn you; fund house and the software. So, I am all down and again call the fund house. Now, there’s another process. “Sir, please get a new PAN card issued and submit signature change form again”. No arguments or discussions, I did it like an innocent lamb. I submitted the PAN card correction application form and received a new PAN card in 2 weeks. I then submitted the signature change request and it was processed this time. Finally, I submitted the redemption request and it went through. The date of my credit card bill hard already passed but somehow this credit to my account was really sweet :). In a nutshell, for my redemption request, I had to go get a corrected PAN card and update my signature.
The first thing I did after this was to get all online accounts setup and have the power of anytime redemption with the utmost ease and convenience. Highly recommend this to all investors.