Mutual Funds
The pains of MF redemption when your child becomes major
Mutual funds seem to have designed a process of redemption to ensure that money does not flow back or make redemption as difficult as possible for the child who turned major and for his parents
 
The mutual fund (MF) industry wants us to invest with them. Not a bad thing for us too. However, they have designed their processes that are frustrating, to say the least. They have been designed by people, who apparently have worked with the Government of India. If one form will do, they will make you fill five. 
 
They come and solicit investments in the name of your minor children. Whilst opening the account, all you need is one simple form. However, once your children attain the legal age of ‘majority’, the processes are designed to screw your happiness. The typical requirement when your child becomes a major, are the following:
i) Copy of PAN Card;
ii) Copy of cheque leaf with his/her name as first named ;
iii) Proof of date of birth;
iv) And a fresh KYC form (they just ask you to produce a copy of the acknowledgement of the KYC submitted);
v) Bank account details of the minor turned major, with signature certified by the banker and a ‘specimen’ cheque leaf of that account.
vi) A mandate for change of bank account- Initially the bank account would be the guardian’s. Once major, the account must be of the minor.
 
In addition, I never got a communication from HDFC Mutual Fund, telling me of the implications as to when they become a major. Probably they never thought that I would hang around so long. They seem to have designed processes to ensure that money does not flow back or make redemption as difficult as possible.
 
Still, based on my splendid initiative, I distinctly recall that a couple of years ago, I submitted the fresh PAN data, and bank account number to the asset management company (AMC)’s office.
 
Now, my child wants to redeem. The registrar and transfer (R&T) agent sends a mail demanding the above. How delightful. I have to go through the whole bloody mess all over again.
 
While opening the account, they must have taken a date of birth on record, for the minor. All they have to do is to match it with a PAN card copy that I submit. And why does one have to self-attest the copy of the PAN card? They can simply check it online.
 
I had stopped investing in to the kids accounts, in the MF for over 10 years now. How do they expect me to keep a ‘copy’ of the acknowledgement of the KYC form?
 
The Association of Mutual Funds of India (AMFI) seems to have designed the harassment process in the certainty that some money will become forgotten, some guardian will die without the family knowing about the account or some such thing.
 
In the last few years, I have stopped receiving any physical account statements from the mutual fund. It is natural for AMFI to enrich the trade which it represents. And the Securities and Exchange Board of India (SEBI) is unfortunately ignorant of actual ground realities. 
 
Of course, the fault is mine, for trusting someone like HDFC Mutual Fund. I should have been alert, gone and sat in their office on the 18th birthday of my children and completed the paperwork. And every month, kept checking online for the balance and NAV. Now I am not even sure that the investment record they give will be correct. Can’t blame them though. The investment world is designed to cheat the investor. It is another case of ‘caveat emptor’.
 
My son and my daughter put in their redemption requests almost on the same day, at Chennai and Mumbai respectively. My son went and met the banker as well as the AMC (located in the same building) and gave whatever they wanted. But the AMC did not acknowledge the redemption request. They said that the KYC has to be updated on the system and that it would take three working days and then the redemption request could be submitted. The Bank-broker did not help. I do not know why the three working days was sought. Nothing in the rule book, but the arrogance of HDFC Mutual Fund prevailed. Once three days were over, the form was submitted and the amount was credited after another three or four working days. From start to finish, it took about 10 days.
 
I was more confident about the outcome of my daughter’s redemption request because the account statement showed her as KYC compliant. She submitted the papers to CAMS, the R&T agent. They wanted some papers like bank account statement certified and PAN card copy. After about five days or so, I got a credit in MY account, on the morning of a particular day. Suddenly, in the evening, I get an SMS saying that the credit was reversed! I spoke to my distributor (the RM at HDFC Bank) who told me that I would get it next morning because it was T+3 and the date was only T+2. My calculations were different and I called up a helpline. One nice lady, Helen, told me that KYC was not proper. My daughter had to submit a ‘change of bank account’ mandate. I told her that my daughter had submitted everything that the person at the counter of CAMS wanted. But she was like a stuck tape-recorder and would not budge. I told her that my daughter had submitted an extract of her bank statement, certified by the bank officer, which had all the details of the bank account. This lady said nothing doing. Do it my way, if you want the money. In all this delay, unfortunately, the market was falling and I was losing NAV. No issues, since if the market was rising, I would have gained. The issue was one of NOT GETTING MY MONEY. 
 
Finally, I took to Twitter. Sent a DM to the R&T. After a day or so, a nice gentleman from CAMS heard the full Mahabharat and ensured that the amount would be credited on that day itself. All I had to do was to submit a copy of a cheque leaf of my daughter’s bank account. 
 
CAMS as R&T helped me out thanks to my social media outrage. They also suffer due to quality of personnel at different locations. However, this is no fault of theirs. India has standards of after-sales service bordering on the non-existent. And the industries just capitalise on it.
 
The biggest offenders in this episode are HDFC Bank- the brokers (distributors) who sold this mutual fund. Apart from up-front commissions, they have earned trail commission on everyday of my investment remaining with the mutual fund. When I needed help, they hardly bothered. In fact, as I was following the progress and sought their help, I got none.
 
It would be useful if SEBI mandates that an investor can write to the AMC and terminate the payment of brokerage to the distributor. It can pay the trail commission to anyone that the investor nominates. Today, there are no Service Level commitments provided by the mutual fund distributors, who earn commissions. Typically, the employees of the distributors have targets for new upfront commissions, so they happily ignore the service to old accounts. And when HDFC Bank keeps changing its Relationship Manager every other year, what are the chances of an investor getting any service at all, unless he is a mulch cow for the products being sold by the RM?
 
I do not know if AMFI will bother. I know that the fund house will not bother. I am the stray investor who has been careless about investment. Once I buy something, it is surely my bounden duty to ensure that I keep everything up to date, and read up the laws. The distributor and the fund house have done me a favour by accepting my investment.
 

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COMMENTS

Pradeep R

4 weeks ago

I found it extremely difficult to deal with mutual funds, especially any thing above 20 to 30k they make life very difficult for investors to take back their money. I have invested in DSP and Birla Mutual fund both of them do not want to give money. So they keep creating hurdles like signature mismatch. Birla on the other hand looks like decided to siphon my complete money. I gave redemption request online, so what birla did is they made account 0, but not crediting it to my bank. So now I have to brace myself for long battle. I am an NRI, I have decided will not have a fresh deal with Indian mutual funds or stock market in future.

V ganesan

1 year ago

T ime and again investors are asked to submit lot of fresh forms in the name of KYC and fatca etc .Even the old account numbers are changed by the bank because of core banking .But the mf industry is asking proof for the old account number.Even for tranmission cases in shares company is asking for guarantor.Friends and relatives are hesitant to give guarantee.Processes and procedures must be simplified in indian capital market.

Ganesh Shetty

1 year ago

HDFC mutual fund is the most arrogant fund house as far as redemption goes. Because of Prashant Jain / marketing team they have got overhyped. There are equally well performing fund houses who do not get into the limelight.

But then it is not just the mutual fund, even HDFC bank has the same attitude.

So far us the best solution is stay away from HDFC both the bank and the mutual fund.

George Joseph

1 year ago

I am currently having a similar issue with Birla Sunlife MF despite the fact I am a MF Distributor. Fortunately, I had obtained a PAN card, done the KYC, and had my son's bank account as the bank account on record in his folio. The funny thing is that the day before he became a major, the funds could be redeemed with my signature. The day my son became a major, my signature is not adequate, but that of the bank is required to attest his signature.

What the dumb guys have at Birla and AMFI have not realised is that I have to attest my son's signature at the bank in the first place.

George Joseph

1 year ago

I am currently having a similar issue with Birla Sunlife MF despite the fact I am a MF Distributor. Fortunately, I had obtained a PAN card, done the KYC, and had my son's bank account as the bank account on record in his folio. The funny thing is that the day before he became a major, the funds could be redeemed with my signature. The day my son became a major, my signature is not adequate, but that of the bank is required to attest his signature.

What the dumb guys have at Birla and AMFI have not realised is that I have to attest my son's signature at the bank in the first place.


manhar kothari

1 year ago

It reflect indian mind set who are holding post is to show his power and not think logically.

VISWANATHAN K N

1 year ago

Incidentally my wife & myself have separate ICICI Bank & ICICI Direct account. Yet they demand so much of documents for just adding a Joint holder to our MF accounts.

REPLY

R Balakrishnan

In Reply to VISWANATHAN K N 1 year ago

Time to start thinking of alternatives to mutual funds.

Prahlad

In Reply to R Balakrishnan 1 year ago

Have HDFC Mutual Fund read and contacted you

VISWANATHAN K N

1 year ago

If you want to include a Joint Holder to ICICI Direct account their site gives you the list of forms to be submitted. I did it exactly as given in their site & went to their Mylapore Chennai office to submit. 1. They said they will not accept because I have not used black ink. Nowhere in the site it says black ink is to be used. So I requested for a fresh form. 2. They brought an additional form which was not in their site "Mutual Fund Joint Holder FATCA declaration for US Person(Individuals)". 3. As per the site one KYC is to be submitted with signature attested across the photo ( a very difficult thing to do with ball point pen which is what is used mostly nowadays. Also I don't know what purpose it serves by signing across the photo. Even for US Visa they don't ask you to sign across the Photo). But the Mylapore office wanted 2 sets of KYC. So I had to fill another set & get it signed by my wife. 4.I had attached the latest Gas Bill as proof of address for my wife which is accepted for KYC. But ICICI direct will not accept the Gas Bill as proof of address. 5. So I gave them my wife's HDFC bank account details which I readily had. No sorry, ICICI direct will accept only ICICI Bank proof. 6. So i gave my wife's ICICI Bank statement. 7. No they wouldn't accept it because I gave for only one month. It should be for 3 months & attested by the account holder. 8. No they wouldn't still accept it because my wife did not sign in all sheets. 9. Now comes yet another demand. You should submit your wife's passport copy also. Finally it was accepted.Then I wrote a detailed mail to ICICI direct Helpline to include all the above things which are not mentioned in their site but demanded by their office. I got a automated reply for the mail. A week later one person from the company called up & asked for the details. I said I have sent a detailed mail & he can understand the whole issue by reading the mail. There was a no feedback for one week. Then I escalated the issue. Till date there is no response nor there is any change in their site. Today i have written to their COO as suggested in their site for escalating unresolved issues.

REPLY

R Balakrishnan

In Reply to VISWANATHAN K N 1 year ago

Amazing. Just tells us that there is absolutely no standards on documentation. AMFI as an institution has wrongly been given any powers at all by SEBI. It is the one eyed leading the blind. Sad.

Prahlad

1 year ago

Honestly, I get blind replies when I call them.
I hope their service improves else they will lose AUM

Suketu Shah

1 year ago

There are some 600 odd MFunds available.How many have beaten the sensex last 1 yr.Maybe 20-25 max.Goes to show in MF the agents make more money than you by fooling you and understanding the way MF works is difficult as the fund manager changes shares several times in a total illogical way.

a mehta

1 year ago

Writing to SEBI or AMFI does not serve any purpose as I have done a few times earlier but no response from them or they just to post office work and forward the complaint to the concerned AMC and do nothing further

REPLY

Shirish Sadanand Shanbhag

In Reply to a mehta 1 year ago

I fully agree with you, Mr. Mehta.
Government made SEBI as a watch dog for investors, to redress investors' complaints of Equity Markets & Mutual Funds.
But SEBI now-a-days acts as a conveyor of your complaints to the Share Market & Mutual Funds.
AMFI is apix body of all Mutual Funds to redress investor's complaints against Mutual Funds, which AMFI is not doing it.

Sachin Bhutada

1 year ago

I had similar problem dealing hdfc mutual fund. While accepting the money parents accounts is valid. Then why while redemption while the child is a minor , proceeds not credited to parents account registered?

Prashant Rane

1 year ago

Hello,
You should have gone through SEBI and asking for what is the required documentation. You would have got much quicker and smooth service.

Abhijaat Sinha

1 year ago

Its not just after the child attaining majority...I am facing a problem with Tata Young Citizens Fund...Its been more than 7 years and I want to withdraw and my son is still minor but they are insisting on a bank account in minor's name with cheque book bearing his name. I submitted a bank statement which they refused to accept. Its just frustrating dealing with these mutual funds. They are designed to frustrate you and create as many hassles as possible while redeeming.

Abhijaat Sinha

1 year ago

Its not just after the child attaining majority...I am facing a problem with Tata Young Citizens Fund...Its been more than 7 years and I want to withdraw and my son is still minor but they are insisting on a bank account in minor's name with cheque book bearing his name. I submitted a bank statement which they refused to accept. Its just frustrating dealing with these mutual funds. They are designed to frustrate you and create as many hassles as possible while redeeming.

Roll-over facility in BSE stock lending, borrowing from Monday
The Bombay Stock Exchange will introduce from Monday roll-over facility under their stock lending and borrowing (SLB) scheme to increase participation in the market.
 
"The roll-over facility in SLB segment will be launched with effect from September 7," a BSE circular said.
 
The facility in the SLB session will be available for a three-month period consisting the original contract plus two roll-over contracts, it said.
 
The scheme allows short sellers to borrow securities for making delivery. Under the roll-over facility, lenders or borrowers of securities would now be allowed to extend the period of lending or borrowing, as the case may be.
 
The National Stock Exchange had earlier launched roll-over in its SLB scheme.
 
Markets regulator Securities and Exchange Board of India had, in November 2012, permitted the roll-over facility to be introduced in the SLB scheme.

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COMMENTS

Irfan Shariff

1 month ago

Whome ever it may concern please kindly request issue all pending investors money as soon as possible every investors is crying for getting their investment money in pacl India Ltd and I don't know when it will clear pls do need full ASAP

Task force to monitor Delhi's public utility projects, HC told
For citizens of Delhi bemoaning the perennial delay and shoddy execution of civic and public utility projects in the capital there is hope at hand. A “'high level task force” is on the anvil for devising a modern system of governance for planning, execution and monitoring public utility projects to turn Delhi into a world-class city, the union government has informed the Delhi High Court.
 
The task force will devise a mechanism to fix “single-point accountability” for non-performance by agencies involved in civic infrastructure projects, the government said in an affidavit filed with the high court. The Centre said the task force will oversee a nodal agency for "effective and efficient coordination between civic agencies engaged in public welfare projects".
 
The Centre said the task force will have representation from various stakeholders, including the Delhi Police, the New Delhi Municipal Council, the three civic bodies, the Public Works Department, the Delhi Development Authority, the Delhi Metro Rail Corporation and the Unified Traffic and Transportation Infrastructure (Planning and Engineering) Centre, as also experts and consultants from various fields and representatives of various departments.
 
The affidavit was in response to a public suit, on which the court had directed the union home secretary and Delhi's chief secretary to name a consultant, a think-tank or an expert to suggest ways to turn the national capital into a world-class city.
 
A division bench of Chief Justice G. Rohini and Justice Jayant Nath had remarked that despite expending huge funds and best intentions of the officials, the city is not able to achieve the world class status to which it aspires.
 
The government said that the task-force will put in place an appropriate mechanism and recommend modern tools, systems and policies of governance/administration in the concerned agencies.
 
"There is an existing arrangement of clear division of functions and responsibility between various agencies of the government for providing civic facilities for the benefit of the general public, including special facilities for persons with disabilities," the affidavit said.
 
"These agencies are responsible for installation, maintenance and regular upkeep of the civic infrastructure in their respective fields of operation and areas of jurisdiction.
 
"There is a need to align and further coordinate the system of governance with changing demands and modern management technologies so as to ensure an effective and efficient administration in the National Capital of Territory of Delhi," it added.
 
It said, the task force, which should meet at least once in a month, will also recommend standards on infrastructure facilities for the disabled.

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