In a significant move to safeguard investor interests and enhance transparency in the mutual fund ecosystem, the Securities and Exchange Board of India (SEBI) has introduced the Mutual Fund Investment Tracing and Retrieval Assistant (MITRA). This new platform is designed to help investors trace and recover their inactive and unclaimed mutual fund folios.
The Growing Concern of Inactive Mutual Fund Folios
Over time, investors often lose track of their mutual fund investments due to various reasons, such as minimal KYC details at the time of investment, lack of a registered PAN or email ID, or even the investor’s demise. These unclaimed folios remain invested indefinitely unless action is taken by the investor, their nominee, or legal heir.
In some cases, such inactive accounts become susceptible to fraudulent redemptions, necessitating a robust mechanism to trace and secure these investments. MITRA aims to address this pressing issue by offering investors a user-friendly search platform.
How MITRA Will Assist Investors
The MITRA platform, developed by Registrar and Transfer Agents (RTAs), provides a centralised database of inactive and unclaimed mutual fund folios across the industry. It serves multiple purposes:
- Identification of Unclaimed Investments – Investors can locate forgotten or unclaimed investments that might have been made by themselves or others on their behalf.
- Encouragement for KYC Compliance – MITRA urges investors to update their KYC details, reducing the number of non-compliant folios.
- Reduction of Unclaimed Folios – By making it easier to retrieve investments, the platform helps in bringing down the number of dormant accounts.
- Enhanced Transparency – MITRA contributes to a more transparent and efficient financial system.
- Fraud Risk Mitigation – A structured mechanism ensures that inactive investments are better protected against unauthorised redemptions.
Classification of Inactive Mutual Fund Folios
A mutual fund folio is classified as inactive if no investor-initiated transactions, either financial or non-financial, have been made for the past 10 years, yet a unit balance remains in the account.
Such accounts may include cases where the investor has intentionally remained invested in an open-ended scheme or has simply lost track of the investment. There is no penalty or consequence for folios appearing on the MITRA platform—its primary objective is to encourage investors to identify and reclaim their investments.
Hosting and Security Framework of MITRA
The MITRA platform is jointly hosted by Computer Age Management Services Limited (CAMS) and KFIN Technologies Limited, the 2 Qualified RTAs (QRTAs). It will be accessible through multiple channels, including:
- MF Central
- Asset Management Companies (AMCs)
- The Association of Mutual Funds in India (AMFI)
- The official websites of CAMS, KFIN, and SEBI
To ensure investor security, MITRA adheres to SEBI’s cybersecurity and resilience framework. It also complies with system audits and regulatory guidelines for business continuity planning and disaster recovery.
Implementation Timeline and Industry Responsibility
The QRTAs are required to make MITRA operational within 15 working days of the circular’s issuance. A beta version will be available for two months to allow for testing and refinements.
SEBI has instructed AMCs, RTAs, Registered Investment Advisors (RIAs), and Mutual Fund Distributors to promote investor awareness regarding the MITRA platform. Furthermore, any new RTAs servicing mutual funds post-circular issuance must adhere to MITRA’s guidelines.
Strengthening Investor Protection
To reinforce investor protection, Unit Holder Protection Committees (UHPCs) have been directed to include inactive folios in their review process. Their role involves monitoring unclaimed dividends, redemptions, and other inactive accounts, ensuring steps are taken to reduce unclaimed amounts.
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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Mutual Fund investments in the securities market are subject to market risks, read all the related documents carefully before investing.
