“We have invested close to Rs50 crore in technologies over the past five years”

NK Prasad, executive director and chief operating officer of Computer Age Management Services (CAMS), speaks on the various services offered by his company for investors, distributors and AMCs in an exclusive interview with Moneylife. This is the second and final part of a two-part series

Ravi Samalad (ML): How are the online services offered by CAMS, KARVY and Franklin Templeton different from each other? What is the product differentiation that CAMS offers?
NK Prasad (NP): In terms of services as RTAs what we provide is very similar to what a manufacturer wants to provide. Now each manufacturer has a certain degree of customisation. The customisation varies from manufacturer to manufacturer and our ability to support that customisation and our ability to give a reliable platform which continuously adds value to the customer is where there is a differentiation. The basic services like NAV allotment on the same day, allotment of NAVs itself, account statements, redemptions, etc are similar with both the RTAs. The service differentiation arises only on account of the other soft attributes in terms of resources, management focus, strategic direction and the support and value that you provide to your customer.
ML: How has been the response for NPS point of presence (POP) offered by CAMS so far? How many NPS subscriptions does CAMS get in a day?

NP: We are seeing an increasing trend. The scheme was launched on 1 May 2009 and this particular scheme is very unique in the sense that there is no intermediation and there is no investment in terms of advertising and communicating the benefits of this scheme to the investors. Everyone was in fact left to do their own to get customers. Initially the response was fairly slow but in December they did a good thing by coming up with the Tier-I account. This was a fixed account which did not permit any flexibility to the customer and Tier-II accounts have given some amount of flexibility. After the Tier-II (account) has come in and because of the Tier-II accounts, many people are opening Tier-I accounts and then Tier-II accounts because opening a Tier-I account is compulsory. We are slowly and steadily seeing increasing numbers. We track these numbers every week.

Secondly, the Pension Fund Regulatory and Development Authority (PFRDA) has decided to communicate the benefits of this scheme extensively to investors. They were waiting for certain clarifications. The Direct Tax Code (DTC) has given some clarifications about the EEE (Exempt-Exempt-Exempt) status of the scheme. They (PFRDA) have told us that they have some campaign which they are going to run in different languages. They have shared some presentations with us. We have shown these presentations to corporates. There is a credible track record of two-three years of NPS returns.
ML: What is the average size of the investments that you get?

NP: Average size could be slightly misleading in this particular case. It would not be an exaggeration if I tell you that the initial contribution runs into six-digit numbers. There are different kinds of investors who are investing. PFRDA asked us this question as to what happens if I remove the four minimum contributions as investments as a mandatory requirement. We said that it's fine and good for the investors. If the investor is going to have one footfall in a year and we get paid once it's fine with us and we have no issues because this is a long-term product. The rupee value of this is Rs20 per transaction, which is what we get paid, and Rs40 is for account opening. I think it's a reasonable number.

ML: What is your total investment in IT?
NP: We almost revamp our technology platforms every two years and that's the single-largest capital budget for us. In the past five years we have easily invested close to Rs50 crore in technologies like data centres, networks and applications.  
ML: You manage data for 4.8 crore mutual fund investors like bank account details, address, contact details, etc. What data security mechanism does CAMS have in place?
NP: We have evolved over a period of 15 years and we recognise that our role is custody of data. We have no conflicting interest in any manner. Just like the AMC is the custodian of investor's money, we are custodians of data. We are extremely cognisant of the operational risks that are involved. For every operation that we have there are a series of checks and balances that are maintained and built around the system. A lot of it is in the system itself like maker checker control, authorisation control and audit trails. In addition to that there are a lot of counter controls like in the form of what we have changed here gets communicated to the investor. For instance, if you change the address there is a letter which goes to the old address and new address. So if it is not initiated by the investor then the investor knows that somebody has attempted to do it. If the investor has provided an email address or mobile number then it reaches them in the fastest possible way. These things ensure that there are hardly any risks and any fraudulent instances. In the 75 million transactions that we process, fraudulent cases have been negligible. 
ML: Now that IRDA is going to regulate ULIPs, what impact will this move have on mutual funds?
NP: Different financial products have the ability to meet different needs of investors. One is an insurance-cum-savings product and the other one is a pure savings product. They do compete for the same investor's wallet but the recent changes that have come in are better for the investors and anything that is better for the investor results in greater adoption from the investor. Today hardly 7% of household savings go into mutual funds and it's a long way to go. 
ML: Apparently, the regulator is very keen on boosting online trading platforms on stock markets which have not succeeded in generating volumes. Does this defeat the very purpose of long-term investment of mutual funds since investors can be inclined to book profits or switch between funds?

The exchanges have just begun and I think they need to be given some time. It's not fair to conclude that there are not enough volumes and there is no potential. At this point of time and the way it is operating, it is yet another conduit available for investors. I still see that a lot of investors prefer to come to our brick-and-mortar offices to submit their forms even if it's a trouble for the investor. It's just a habit. It's a transaction between the fund and the investor. It's not like a secondary market. Assuming that an investor has got a trading account and is also a mutual fund investor, for him to switch between funds there has to be some compelling incentive. 
ML: SEBI has brought in a slew of changes in the mutual fund industry. What more changes would you like to see as an RTA?
NP: All the changes initiated by SEBI have a common thread of investor protection, transparency and accountability. Some of them were path breaking like entry load ban which is difficult for the market to quickly digest. Our experience has been that any market which has given greater benefit to the investor at a lower cost, that market sees an explosive growth. It takes time for people to realise and understand that but it does see an explosive growth. 
ML: What would be your next big step towards growth?
NP: We aspire to grow as a company. Our growth is more or less aligned to the mutual fund industry's growth as long as we continue to keep raising the bar which we always strive to do. Beyond mutual funds we see ourselves as a strong connector of customers to the manufacturer. If it's a financial service we can look at credit cards, NBFCs, life insurance and general insurance which connect customers to manufacturers. All of these manufacturers want a set of support (systems) in terms of transaction support and service support. If each manufacturer were to build their own infrastructure like IT, customer service and people, it is going to be very extraordinarily expensive. They can ride on a common service provider like CAMS which is completely neutral and which is agnostic to any industry. These manufacturers can provide their service to their customers in a customised format. This is the unique advantage that we take on the table. We believe as the outsourcing outlook improves in the domestic market, and as the market grows, we will enter into a similar category. There are many opportunities within the financial sector.



Narendra Doshi

7 years ago

To add to the comments of my earlier Mr. Narayanan, I - an IFA - am a FundsNet/FinNet user since last three months, I think this platform for intermediateries will EXIST in parallel to the Stock Exchange for many years as the latter will take time to mature & evolve over time, just as CAMS has evolved into Fundsnet, after almost a decade.
I have found & experienced CAMS BEING AHEAD of time & wish CAMS to not only keep up the good work, though they need to increase their efficiency & also look that their leadership does not get diluted (which has actually happened) .
Best wishes for the leader to come into its OWN.


7 years ago

The ED Mr. Prasad has not spoken about the intermediaries..for whom Cams has a online platform for transacting through Fundsnet/Finnet. What is the future of this platform when Sebi/MF industry is moving towards online trading with Demat format...<
I seek his valuable opinion on this portal of CAMs...

BCCI delivers a doosra to I-T authorities, shifts headquarters to Chennai

The world’s richest cricketing body, BCCI, is finding new loopholes to remain a charitable organisation and pay no taxes. Sources confirm that it has shifted its headquarters from Mumbai to Chennai

The Board of Control for Cricket in India (BCCI), the richest cricketing body in the world, has come up with a new trick to evade the tough stand of the Income-Tax (I-T) authorities in Mumbai. According to informed sources, BCCI has shifted its headquarters (or corporate office) to Chennai in order to make a case for moving its tax assessment to that city and has already started the process in that direction. This means that the investigation launched by the I-T officials from Mumbai will have to be transferred to Chennai. BCCI and its politically powerful patrons have already been exerting tremendous pressure on the Mumbai I-T officials in connection with their finding and the cancellation of its tax-exempt status as a "charitable organisation".

Reliable sources tell us that the shift to Chennai occurred just around 15 days ago. This could well mean that the BCCI would seek a re-evaluation of the cancellation of its tax exemptions through I-T officials in Chennai. Our sources, who have knowledge about BCCI's actions, say that it has an income of over Rs400 crore last year but cannot show a single charitable activity, whether it is to discover new talent or hold free cricket-training camps. All its activities are focussed on maximising its revenues.

According to an expert, the Income-Tax Act permits an organisation or an entity to be assessed for tax in another State (by the tax authorities). However, if the entity being assessed can prove that daily operations or board meetings have occurred in another State, then the assessee can request the I-T department for a change in assessment circle.

Interestingly, a little-known fact is that the BCCI was originally registered as a charitable organisation under the Tamil Nadu Societies Registration Act. This probably made it so easy for it to request a change in assessment circle without attracting any publicity or media scrutiny so far. In addition, the BCCI's powerful honorary secretary, N Srinivasan, probably has the clout to ensure this transfer, especially when the Mumbai tax hierarchy is not in a mood to be soft on the cricket body. 

Moneylife contacted BCCI's chief administrator officer (CAO) Ratnakar Shetty, but he refused to comment and abruptly disconnected the call saying we should check with the I-T department. Former BCCI president Jagmohan Dalmiya and former chief selector Kiran More say that they have no knowledge of these developments. The entity's vice-president, Rajiv Shukla wasn't available for comments. However, BCCI's press relation officer, Devendra Prabhudesai stuck to the stance that the sports entity was headquartered in Mumbai.

In late April 2010, all the eight original Indian Premier League (IPL) franchisees-Chennai Super Kings, Deccan Chargers, Delhi Daredevils, Kings XI Punjab, Kolkata Knight Riders, Mumbai Indians, Rajasthan Royals and Royal Challengers Bangalore-each owned either by big corporate houses or Bollywood superstars, came under I-T scrutiny.

The I-T Department wants from BCCI bidding documents, contract agreements for the eight IPL franchisees, disclosure of documents supporting ownership, shareholding, details of players' auction, payments made, deposits made to IPL, BCCI and franchisees, details of income, capital payments made to franchisees and balance sheets, and other receipts related to the IPL.

Suspended IPL commissioner Lalit Modi had recently agreed to give up all documents relating to franchise bids and media rights of the IPL which the BCCI had asked for. After receiving a letter from N Srinivasan, BCCI secretary, Mr Modi agreed to return the missing documents to Mr Shetty, a television channel claimed. This proves that the I-T Department would not have been able to assess the documents earlier as they were still with Mr Modi.

The I-T Act which was amended in 2008 states that an organisation cannot be called a 'charitable' one if it carries on trade, commerce or business. In March 2009, its then chairman, Mr Modi, only made the case stronger for the taxmen by bragging about IPL riches and its ability of crossing the billion dollar mark. At the time, BCCI had made over Rs1,000 crore in 2007-2008. The IPL alone has showed tax deducted at source of Rs91 crore.

One must keep note, when Mr Dalmiya was BCCI's president in 2001 to 2004, he shifted its headquarters from Kolkata to Mumbai and when Union minister of agriculture Sharad Pawar took over, he again shifted it back to Mumbai.

The I-T department officials from Mumbai may have given the BCCI a rough time with their tax scrutiny, particularly with the charitable tax exclusions, but what remains to be seen is how much will the Chennai I-T department officials manage.




7 years ago

Charitable organization ?

I feel like laughing. What charitable things have BCCI done ?

Why should they get tax exemptions ?

Let the cricket lovers and other citizens answer honestly.


7 years ago

IPL, I humbly feel, is a very dynamic & interesting type of cricket wherein different cricketers, Indian & foreign, experienced & young play and it gives the young , upcoming cricketers a chance to play against experienced cricketers, Indian & foreign. A majority of the public love to watch this type of cricket in the stadium and in tv at home in India and abroad. One can see how the crowd in the stadium jumps and dances with joy at regular intervals. As a member of the public I would say that we cricket lovers are not fools to get conned (as someone states). We do know what is worth and what is not worth. It is easy to point fingers at others. In fact, we should thank BCCI and the frachisees of IPL teams for having introduced a lovely , dynamic type of cricket and we were able to watch different types of cricket players.
If the government can give road laying work, toll plazas etc to private parties, why cannot BCCI bring in franchisees to raise funds for running this fine game? Is the government not allowing those private parties to take something in return for their investment? And if the franchisees get something in return for the risk they take in their stakes, what’s wrong in that? It is something like interest which an organization pays for the money brought in by someone with the ultimately objective of promoting cricket of a very different type which majority of cricket lovers and even other sports lovers like. This cannot be called business in my humble opinion (with due respects for opinion of others) . THIS IS ONLY INCIDENTAL TO THE ULTIMATE AIM OF PROMOTING A DYNAMIC, VOLATILE , ENJOYABLE CRICKET WHICH IS ALSO CHALLENGING FOR THE CRICKET PLAYERS.
Every business organization pays interest or dividend and uses the balance for the purpose of achieving its objective. Similarly BCCI gives returns to the franchisees for the risk they take in their investment and uses the balance for the development of cricket. What’s wrong in that?? Can the IT people prove that the balance amount is not used for the promotion of cricket?? It is easy for us to point out fingers at others and speak as if we know all the details. Let us not forget, if put to vote to cricket and other sports lovers, IPL cricket will certainly get the maximum vote as against the other types of cricket – Test and One Day. This of course does not mean Test and One Day are of no use. They have their advantages too.
To conclude, I humbly feel , that giving something in return to franchisees for their investment & risk in only INCIDENTAL to promotion of a lovely, dynamic, volatile, enjoyable cricket and there is no business in this for BCCI. It may be a business for franchisees but certainly not for BCCI which the IT authorities should understand.



In Reply to JAYANT L AASHER 7 years ago

how stupidly innocent!

Col J Frederick

7 years ago

Once a thief always a thief. The adaucity with which this body functions is unbelievable.BCCI AND ITS ACTIVITIES needs to be frozen, all its members and affiliate organisations at national and state level need to be investigated and the IPL of course -seperately.people need to be jailed.The comman man has been conned and is paying for the riches of card board cut out cricketersand of course the maharajas of the BCCI.

Avinash Murkute

7 years ago

Liability never ends as longs as Income Tax authorities are not beholden. No Info or any Sys (Info-Sys) can manipulate if the blood flowing in the arteries and veins of IT officials is not bribe colored.


7 years ago

Let the BCCI change their corporate or registered office to any place. The cases pending if any, prior to this effect to be conducted by the IT of the erstwhile area only. If we allow this then in future each and every one will shift their offices from one place to another without any consideration.
I wonder how this organisation registered as Charitable set up at Chennai and as non-charitable at Mumbai. If it is so then transfer of property or assets or liability from one identity to other itself not possible and the one who transfer it to charitable to prove their sources and pay taxes to their earnings correctly. We have to fix the people behind this type of transactions and cheating in front of the law seriously.
Nothing is impossible if the IT authorities are ready to act sincerely.
We are not advising hem to do like this or that way, be genuine in your action and collect the due tax which is required to be.


Daily Market View: Uptrend still intact

The Sensex will hover around 17,600 before the next move

The market witnessed a subdued closing today, as traders rolled over their position in the derivatives segment from the near-month June contracts to July contracts ahead of the expiry of the near-month June derivatives contracts on Thursday (24th June). The Sensex settled lower at 17,749, down 126 points (0.7%) and the Nifty ended at 5,316, down 36 points (0.7%). The indices started the day on a negative note, taking cues from the Asian markets. Trading was range-bound till mid-morning. The market recovered from there and gained till early afternoon. However, it slid from there to shut in the red.

Asian stocks were down on Tuesday on concerns over Europe's economic crisis after Fitch Ratings cut its debt rating on French bank BNP Paribas SA. Fitch reduced BNP's long-term rating to AA-minus, the fourth-highest investment grade, from AA on deteriorating asset quality. Key benchmark indices in Japan, South Korea, Singapore, Indonesia, Hong Kong and Taiwan fell by 0.2% to 1.2%.

US indices closed lower on Monday. The Dow was down 8.2 points (0.08%) at 10,442. The S&P 500 was down 4.3 points (0.3%) at 1,113. The Nasdaq was down 20.7 points (0.9%) at 2,289.

Japan has set an ambitious target to control its fiscal deficit. The government pledged to do its utmost to keep new debt issuance in the year to next March at or below about 44 trillion yen ($483 billion) that has been earmarked for this year, while aiming to steadily reduce bond issuance thereafter.

Back home, a bumper harvest prospect because of a good monsoon has livened up the possibility that India should lift the export ban on non-basmati rice. India is the world's second-largest exporter of rice. Thailand banned exports of non-basmati rice in 2008, as high prices of the grain put pressure on domestic supply.

The government will decide on the fuel price hike on Friday. Earlier this month, the government deferred a decision on raising fuel prices, the second time in a year, which is a politically-sensitive reform measure.

Foreign institutional investors were net buyers of equities worth Rs1,564 crore on Monday. Domestic institutional investors were net sellers of Rs 561 crore. 

Hindustan Dorr-Oliver (up 0.5%) has joined hands with Bronswerk Heat Transfer BV, Netherlands, a technology and manufacturing company that supplies air-cooled heat exchangers and high-pressure heat exchangers to various process plants, process license holders, plant construction companies and leading global consultants.

L&T (down 0.8%) thermal power plant construction business unit has secured two orders aggregating Rs827 crore from GVK Power for the latter's Gautami Combined Cycle Power Plant Expansion and from SEPCO-I for the Talwandi Sabo Power Plant in Punjab.

JIK Industries (down 2.9%) has successfully commenced its showroom in south Mumbai and is planning expansion in the form of own retail stores, franchise stores, shop-in shop, etc. The company will be focusing on development of new designs and increase of profits in this segment. There is no significant competition in its product profile. The company is considering floating a subsidiary abroad and increase its focus and capabilities in the high-end luxury product segment and export to Europe and the Middle-East.


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