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00:00 Hi, thanks so much for joining in.
00:09 You are watching The Mutual Fund Show on NDTV Profit and my name is Alex Mathew.
00:12 This show is geared towards getting you better insight into your investments into mutual
00:18 funds.
00:19 But from the start of this month, a lot of you have been unable to transact and in fact,
00:25 you have been restricted in some cases with regard to investing in new mutual fund schemes.
00:31 All of this relates to changes in the norms related to KYC and we will talk about why
00:36 that is.
00:37 If you are unaware of this, then you are in the third of three camps as I see it of investors.
00:44 The first is annoyed, the second is resigned and the third is blissfully unaware.
00:51 But the bottom line is that you need to fix these issues and to that end, it is important
00:56 to identify why these issues are cropping up in the first place.
01:00 I am joined on this show by Swaroop Mohanty, the Chief Executive Officer of Mirai Asset
01:06 Mutual Fund.
01:07 Thank you so much Swaroop as always for taking the time.
01:10 Let us talk about why this has occurred and what the context is and we will also try and
01:15 get the mutual fund perspective because I am sure you guys are not happy with the implications
01:20 in terms of flows.
01:21 So first, why is this issue cropping up?
01:23 See Alex, first of all, thank you so much for having me on your show on such an important
01:29 topic as we speak.
01:30 But we mutual fund guys come with our own disclaimers.
01:33 So let me put my disclaimer up first.
01:35 There are two types of people, the lawmaker and the law follower.
01:39 I am a law follower.
01:41 So I am in the second category.
01:42 I resigned to the fact that if something is laid down by law, I just follow it.
01:47 And in this case, the ideology of considering that you have to move to a Aadhaar based KYC
01:55 process is something which is proving to be a bottleneck because a lot of investors of
02:00 the past had used other verification documents for their verified status.
02:06 Now when you are asking them to again redo the process and move to another base, let
02:11 me put the other perspective also that today the Aadhaar is the universally accepted KYC
02:19 is a reality.
02:20 So the new law now says that let's move to this process and that's where this thing of
02:27 again having to redo your KYC process is proving to be a bit of an issue for many people in
02:33 the market.
02:34 Okay, let's talk about the various statuses because this is now quite a big debate on
02:40 social media platforms.
02:42 Everyone is wondering what is happening.
02:45 If and you kind of explained this already, but I won't make this crystal clear.
02:49 If you used another document, another, you know, validation document, identity proof,
02:58 like for example, a passport or a driving license or even a PAN card, you will need
03:03 to do this again with the Aadhaar and that was something that kicked in on the 1st of
03:10 April, but you fall into three categories as I understand it Swaroop, correct me if
03:14 I'm wrong.
03:15 Either you are verified in which case you have done an Aadhaar eKYC already and you
03:20 are not supposed to do anything.
03:23 You are registered in which case you have used, if I'm not mistaken, the PAN and you
03:28 can continue to invest in existing folios, but you can't do fresh investments.
03:33 And the third is you are on hold.
03:35 Can you explain the third?
03:37 Yeah.
03:38 So if you have not verified the respective documents or you have not been verified as
03:42 you rightly pointed out, the first one is when you are validated.
03:45 I mean, you are, see at the outset, Alex, let's understand one thing.
03:49 Why the Aadhaar?
03:50 Because the Aadhaar is the only document that can be revalidated by the IUADI or the concerned
03:57 government authority.
03:58 That's why the preference of the Aadhaar.
04:01 Now if you've used PAN or any other documents and you continue to invest, so there is this
04:06 allowance of continuing to invest in the respective fund houses and those people will have issues
04:11 in investing in new fund houses.
04:13 That's where it comes in.
04:14 The third one is where you are put on hold, meaning that your documentation is not in
04:20 place as per the new verification process.
04:23 It has a very simple way of doing it.
04:25 Easier said than done for many, but it's very important that the investor now goes on to
04:30 the respective websites.
04:32 I think Amphi has just sent out a very interesting pamphlet which simplifies that whole thing.
04:38 Go and first check your status on CVL-KRA or on any of the other websites.
04:44 And as per your status, which will read either you are validated or you are verified or you
04:49 are on hold, then go about redoing the whole thing as per the instructions of your status.
04:56 CVL-KRA is essentially the place that you go.
05:01 It's www.cvlkra.com and you have to enter your PAN number to identify.
05:06 In the KYC status?
05:07 Yeah, in the KYC status.
05:08 You can give me your status.
05:10 And then the further steps beyond that.
05:12 The question is why couldn't this have been done better because as I understand it, Swaroop,
05:18 a large number of investors, particularly the do-it-yourself investors, were completely
05:24 unaware of this and they found out post the 1st of April when they tried to make a transaction
05:31 and it failed for whatever reason.
05:33 In certain cases, they have been unable to redeem as well, which is a bit of a problem
05:38 because you're trying to, in certain cases, get money out of a liquid fund situationally.
05:43 Anecdotally, we found out that money was required.
05:46 It's not available.
05:47 This could have been done better.
05:49 Alex, I know many people will not like it when I say whatever I'm going to say.
05:54 Finally, a lot of these laws come in to safeguard the person's money.
06:00 And finally, it's the person's own money.
06:02 And today, it is true that your Aadhaar is your first step to or your first kind of go-to
06:08 method of safeguarding your own identity, your own verification process.
06:13 And when that is put in place over the other documentation that you submitted, you can
06:19 be of two things. Let me now safeguard my money and go the other way.
06:24 Or I can then say, you know, there's a bit of a problem.
06:27 Why am I being asked to do it?
06:29 It is true that one has to always aspire to safeguard one's money.
06:34 And today's digital world, you are then subject to a lot of or you are prone to a lot of frauds
06:41 that are happening as we speak.
06:44 And it's in the selfish interest of the investor that they safeguard or create a moat of security
06:49 and safety around the money that they have.
06:52 And we are seeing instances where such frauds are happening.
06:56 And hence, probably the regulator thought it is time to take this step or take the plunge
07:01 of cleaning up this act.
07:03 Now, every process can be done better.
07:05 Let's be very honest on this.
07:07 It is now this from a data of 4.3 crore portfolios is a huge task.
07:12 There is no denying that.
07:15 And I'm completely with people who are say, the NRIs or probably senior citizens sitting
07:21 out of smaller cities who are clueless as to why or how this has happened.
07:26 But this is an essential step.
07:28 And if it is to safeguard my own money, when I went and re-registered myself, I saw the
07:33 process and it's not exactly easy for me who's part of the industry who has had to do it.
07:39 Sometimes the servers are down and I've gone through all that.
07:43 But if I come from the single motive of how do I safeguard my own money in its truest
07:48 form, then this is a necessary step is where I come from.
07:52 Okay.
07:53 Can the industry do anything to facilitate this?
07:57 You know, I'm asking from the perspective of making it easier for the groups of individuals
08:02 that you've pointed out to.
08:04 NRIs, I don't see how they're going to resolve the situation.
08:08 Of course, they have valid documents which they have to use to do the re-KYC, even if
08:14 they don't have an Aadhaar.
08:15 But old people, I would think, are going to find it difficult.
08:19 So is there anything that the industry can do?
08:21 And I also want to find, I'm curious, mutual funds would have seen quite a big impact in
08:28 the kind of flows that they would normally get through lump sums in fresh folios.
08:33 Is that going to be witnessed in the fund flows in the month of April?
08:38 Yeah, Alex, I think something which you referred to is very important.
08:42 And I'm of the camp that fresh inflows, whether it's impacted or not, is not the bigger issue.
08:49 Redemption should not be stopped.
08:50 Yes.
08:51 That's where I'm from.
08:52 You know, that's something which we need to talk and address very quickly.
08:55 Somebody needs money.
08:56 As an industry, we've always taken pride of how liquid we are.
09:01 In the entire COVID period, we paid each penny that was required.
09:04 And this, if it's an hindrance, that is where our first sort of point of action should be.
09:11 And the AMFI is consistently talking to SEBI on this.
09:16 And I'm sure we will find a way forward.
09:18 I mean, when a law is put, maybe some of these practical aspects were not discussed.
09:24 But I think AMFI is discussing that with the regulator.
09:26 And I'm sure when we point out some valid reasons, there is no reason why the regulator
09:32 would not come forward and discuss these final points with it.
09:35 But again, I repeat, if you have to be futuristic and in a new world which is digitally connected,
09:41 it is in the selfish interest of the investor that today or tomorrow, they move to an Aadhaar-based
09:47 KYC process.
09:49 Just a last question.
09:50 And this is something that is going to come up in a few days, Swaroop, and where I foresee
09:55 a bit of an issue.
09:57 And maybe you can weigh in on this, is that from the 30th of April, you need to have the
10:03 PAN as well as the name on the mutual fund statement as the same.
10:10 Is there a possibility that this can create an issue?
10:14 It's not just the name, but also the date of birth.
10:18 So if there's any change or if there's any way in which data is being filled at the mutual
10:23 fund level, this can create a problem.
10:26 Do you foresee any issues here?
10:28 Alex, I pointed back to you.
10:31 If my name is something and my mutual fund folio is pointing otherwise, or if my name
10:35 is something and my PAN is pointing otherwise or my Aadhaar is not, it is in my selfish
10:40 interest to get it corrected.
10:44 And that's an ownership the investor has to take.
10:47 But just as a follow up to that, for example, take my name and I don't use the full name.
10:51 I'm known as Alex Matthew, but my full name is Kochu Parekhil Matthew Alexander.
10:56 And in a lot of cases, I'm also called K.M.
10:59 Alexander.
11:00 And there are a lot of people down south who have this, they just use the initials.
11:05 So in certain situations, one would say that, okay, when you're filling the form, you would
11:10 say Alexander Kochu Parekhil.
11:14 But on your PAN, it's possible that you're saved as Alexander K.
11:18 There are instances where this can crop up.
11:20 So you're saying that that needs to be resolved by the investor themselves?
11:24 Alex, the money comes in and goes back, right?
11:27 Your PAN card, your name and most important, your bank account name have to be the same.
11:32 Otherwise, you are two different individuals in the identity.
11:37 It's a reality.
11:38 Sooner or later that you have to take cognizance off and correct that at a fundamental level.
11:44 If they are different, then the money back to you can be questioned by your bank itself.
11:49 Are you Alex M or are you Alex K?
11:51 It's something which has to be correct as per your own name.
11:55 That honestly is something which every investor has to take on itself.
12:02 Yes, there are data entry errors, which we have to take ownership of.
12:06 There is no doubt or debate on that.
12:09 But I think technology is sorting it out today.
12:11 If you see the KRA, just the basic change of it is an idea, a fair amount of them online
12:17 recently.
12:18 I didn't have to fill in anything.
12:20 The back end took care of it on its own.
12:22 But if my name is not the same on my PAN or Aadhaar or my bank account, I have to correct
12:28 it as on yesterday.
12:30 Otherwise, I'm not going to get my money back is a reality.
12:34 Your bank will reject it.
12:36 Absolutely.
12:37 It's a fair point.
12:38 And we started out with three camps, Swaroop, annoyed, resigned and blissfully unaware.
12:44 Obviously, after this program, there are fewer that fall in the third camp and most people
12:49 gravitate towards the second camp, as you pointed out.
12:51 Thank you so much for taking the time.
12:54 Thank you for having me, Alex.
12:55 We have to clean up our data.
12:57 It's a huge task, but it is in the interest of the investor.
13:02 And after going through all the debates, this is my conclusion.
13:06 I'm just being honest on this one.
13:07 Yeah, no, that's fair.
13:08 That's a fair point.
13:09 Thank you so much once again for taking the time.
13:11 We're talking about what might just be a painful process for you, the re-KYC if you're investing
13:18 in mutual funds.
13:19 And we've talked about what the issue is.
13:21 Joining me now to talk about this and a couple more topics, I've got Praveen Bajpai, who's
13:26 the founder of FinFix.
13:28 Praveen, you deal with a lot of investors.
13:31 Would you say that it's fair that a bulk of them are facing issues like this?
13:36 Good afternoon, Alex.
13:38 Yeah, investors are facing issues and we at the backend are helping them.
13:44 And a lot of that is passed on to, I think, the intermediaries like us who are helping
13:49 and who deal with the investors.
13:52 But yes, in the month of March, actually, Alex, we did get mails regarding the KYC list,
13:59 where the officially valid documents were not used.
14:02 I mean, earlier, of course, they were the officially valid documents, but now which
14:06 are not in that list.
14:07 And we started working on those.
14:09 But as we've moved into April, there have been some surprises where everything seemed
14:16 OK, but probably the emails or mobiles were not validated.
14:20 And since the 1st of April, they started, all the mechanisms were not in place.
14:27 So with each day, for example, I've just recently saw that Amfi has now come out with a graphic
14:32 how it is distributed, the current status of investors.
14:36 The links came up later.
14:37 So I would say probably, you know, it's been a bit of a chaotic time, the month so far.
14:45 And I think it will take another month or so to actually get everything streamlined
14:50 and resolved, and especially for investors where NRIs are involved, CNS citizens are
14:54 involved, and where there is a difference in the name currently, even in the Aadhaar
14:59 and PAN.
15:00 So, yeah, we are all working towards it.
15:04 There are mechanisms which are helping us, more links coming up for validations.
15:09 But in a lot of cases where they say that modifications can be submitted, like an additional
15:13 document, the CAMs and CARBI offices, you know, they are not very on ground.
15:18 They are saying that it's better that we resubmit KYCs.
15:21 So it is a lot of work which is going on at the back.
15:25 As things stand right now, Praveen, and I will ask you separately about NRIs, but as
15:31 things stand in your experience, what is the best way to go about this?
15:35 How do you go about this?
15:36 So first of all, of course, we've already established, you go on to the website to check
15:44 the status of your KYC.
15:48 And once you get the idea of the status, you move forward.
15:51 But assume that you are, you know, you have a status of on hold, or you have a registered
15:58 status, in your opinion, what's the best way to proceed?
16:03 So Alex, for example, if the, obviously the documents, so you know, three groups here
16:08 basically, that number one, that if you had submitted your bank statement or your utility
16:13 bill long time back, and your email and your mobile phone was probably different, or you
16:18 had given your BSNL number back then, let's say in 2010 or 2008, you know, even with a
16:24 valid document, it will go under hold, because you know, you've not been able to validate
16:28 that.
16:29 So I think, of course, you check your status, that is important.
16:32 If a number is coming that, you know, 09 or some other number is written under the address
16:37 group, which is given, that means that you kind of have to do the whole KYC again.
16:43 If it is written as Aadhaar or password, sorry, passport, then of course, you know, a passport
16:48 is for example, still a valid document, then there is a validation link in the Kera, CVL
16:55 Kera website, and you go on that, you put your PAN, so it will show you whether your
17:00 Aadhaar and PAN are linked, whether your email and your mobile is validated or not.
17:06 So you proceed with that.
17:07 But for example, if your emails and your mobiles have changed, then you again have to resubmit
17:12 the new mobile or your email.
17:14 So in cases where something is getting stuck, I think the better way is to just resubmit
17:21 your KYC so that you're good for the times ahead, and it's strange, Alex, that, you know,
17:26 I'll point out because, you know, I was listening to Saurabh, Aadhaar, in our own, you know,
17:33 my experience was not actually taken as the only proof of address till a few months back,
17:38 and we were told that no, in addition to Aadhaar, you submit something else as well.
17:43 And now, the only document that they want is Aadhaar.
17:47 So it's, you know, I feel that there has not been too much of uniformity the way the whole
17:51 thing has been managed.
17:52 It's unfortunate.
17:53 And unfortunately, look, it doesn't change the fact that mutual funds are in fact one
17:57 of the best investments or instruments that you can use.
18:00 And so therefore, the only way to use them is to get this done.
18:05 And we've talked about some ways in which you can.
18:07 Now, one of the statuses that you have is the registered status in which you are allowed
18:14 to transact in the folios that you currently have, but you cannot make new investments
18:20 in the, or you cannot get new folios, that is, you cannot buy what you don't have or
18:26 go to mutual funds schemes that you don't currently have.
18:30 But it got me thinking, right, Praveen, of course, you have to fix that situation.
18:34 But there are people with a whole host of folios, and we've spoken about this often.
18:40 Weirdly enough, they are going to be forced to stick with their existing folios.
18:44 Is that such a bad thing?
18:45 A little thing, you know, on the brighter side here definitely, Alex.
18:50 Yeah, that's what I'm trying to get.
18:52 Because, you know, we keep saying that even in the same fund house, people go and tend
18:57 to create a new folio.
18:58 So, for example, if they're investing in ICICI, probably they have five different folios from
19:02 five different schemes, and that is actually not right.
19:06 So it's good, number one, that, you know, probably you look at your portfolio and say
19:09 that, okay, maybe I can take an incremental investment in one of the existing schemes
19:15 that they have.
19:16 Of course, that shouldn't be out of compulsion, but definitely it gives them a chance to review
19:20 if that can be done.
19:22 And the second that I like, you know, the benefit of holding a lesser number of folios,
19:27 I think that comes up and there is a lot of merit to it.
19:30 Because even in the same fund house, you can have as many schemes under the same folio
19:35 and that really adds to a lot of convenience.
19:38 None of your schemes will ever get misplaced.
19:40 So you know, with multiple brokers, with multiple distributors or agencies, you can have the
19:45 same folio.
19:46 And if all the details in one folio are correct, you know, it's then, you know, you're sorted.
19:51 So you don't have different folios where you have to keep checking whether your emails,
19:55 nominees are there or different in all of them.
19:58 So I think definitely a lot of merit to having a single folio within the same fund house.
20:04 I think that is something that investors should ideally do.
20:08 And if they do have multiple folios, they should actually work towards consolidating
20:12 them if the details in all the folios are same.
20:15 Okay, fair point.
20:16 All right.
20:17 Which is not to say that you should not go out and fix the issues with your KYC, you
20:21 must do that ASAP.
20:23 Absolutely.
20:24 That needs to be done.
20:25 And there's merit to that as well.
20:27 Alex, no, you know, little trouble here.
20:29 I would agree that redemption shouldn't be affected at this stage.
20:32 They have to have some mechanism to allow redemptions, even if your KYC is on hold.
20:37 I think that is a very strong case, you know, that should be done.
20:41 But otherwise, I feel that they have to now because you know, people are just sort of
20:46 a vacant yet.
20:47 Okay, this is happening, our ASAPs are going on hold, other issues.
20:50 I think the process further, you know, some sort of facilitation should come and the process
20:55 should become more and more digitized.
20:57 And I say that there has to be a central system where all our details are there and that can
21:02 be fetched by all different agencies, be it your driving license, be it your passport
21:07 and everything.
21:08 I think India is doing so well on that front.
21:11 And this is really needed.
21:12 Yeah, no, the point, but the point on redemptions is absolutely well taken.
21:16 Why should any organization hold my money against my will simply because a document
21:23 is out of place, right?
21:24 But having said that, that point is made.
21:26 There are a few questions that have come our way, Praveen, and I would like to take a few
21:31 of those queries with you.
21:32 The first one that has come in is from Hassan.
21:34 He is 65 years old and he is looking for guidance.
21:37 He says that he has invested 10 lakh rupees in SBI balanced hybrid fund with an SWP, a
21:44 systematic withdrawal plan of 6000 rupees per month.
21:48 His account statement shows a cost of investment of 8,78,224 and the current value is 1,850,000
21:54 rupees.
21:55 So he's made some money on this.
21:59 Is this okay or does he need to change his SWP amount?
22:03 I would think that this has to do with how much money he needs, right, Praveen?
22:08 Yeah, Alex, I think he said SBI balanced funds.
22:11 I'm considering as the SBI balanced advantage fund because there is also an SBI hybrid equity
22:16 fund.
22:17 So it's a two year old fund, Alex.
22:20 And of course, when we do an SWP, it is ideally based on the amount that the investor needs.
22:25 But in any case scenario, the amount, the percentage of withdrawal should be lesser
22:30 than the growth that we are looking at for this scheme.
22:33 And let's not look at the last one year or two year returns.
22:36 It's important that we look at rolling returns or returns over a longer period of time.
22:41 So balanced advantage as a category has given somewhere between 10 to 12% returns over the
22:46 10-15 year period.
22:48 And the amount that he's withdrawing currently, which would be somewhere between 70 to 1000
22:55 a year is lesser than the growth.
22:58 So his withdrawal is around 7%.
23:01 So he can continue with this pace of withdrawal.
23:04 But Alex, if he's trying to do an inflation adjusted withdrawal, then his corpus would
23:10 get depleted in the next 15 to 18 years.
23:13 Fair point.
23:14 The next question is from Prabhanu Sikaria and he's 29 years old.
23:19 He's asking about an investment right now of 8 lakh to 10 lakh rupees with a moderate
23:25 to high risk appetite.
23:26 He is saying that the question assumes significance as the appraisal cycle for corporate employees
23:31 just got completed with the financial year end.
23:34 His current mutual fund holdings are 92% directed towards equity and 8% in debt and the amount
23:40 invested is 20 lakh.
23:42 How should he manage the incremental investment problem?
23:46 It's great to see Alex that at a young age of 29, he's investing a lot towards equities,
23:51 which is great.
23:52 But two things here.
23:53 Number one, I hope that he has a contingency fund which holds money in a liquid fund or
23:58 an FD, which is equivalent to at least six months of his monthly expenses.
24:02 That's a must.
24:03 If he doesn't have that, he should build that first.
24:06 Second, that the asset allocation really needs to be shared because 90% of his corpus is
24:11 in equities and even with the thumb rule of 100 minus your age, it is in the high risk
24:18 category.
24:19 So, I think something that he needs to add is a large cap fund to bring down his equity,
24:27 the volatility in his equity exposure and I think that would be good for now.
24:32 And if he's looking at something more moderate, then a hybrid fund would be a good ideation.
24:36 Okay, fair point.
24:37 Thank you so much, Praveen.
24:38 We are completely out of time, but always a pleasure having you on the program.
24:43 Thank you so much for taking the time.
24:44 Thank you so much.
24:45 Viewers, that brings us to the end of this particular edition of The Mutual Fund Show.
24:48 Let us know what you think and write to us if you've got any questions.
24:51 In the meanwhile, stay tuned.
24:52 Lots more coming up on NDTV Profit.
24:54 Thank you.