Online applications to help mutual funds meet new NFO timeframes

The mutual fund (MF) industry, which has to deal with reduced timeframe for launch of new fund offers (NFOs) and allotments of units, is getting help from companies, registration and share transfer agents to meet the deadline smoothly.

In a first effort, after Securities and Exchange Board of India (SEBI), reduced the launch period for MFs to 15 days and the timeframe for allotment of units to five days, a technology to help funds comply with the norms has been launched.

Computer Age Management Services (CAMS), the registrar and transfer agent, has designed an offering whereby investors or distributors on their behalf can apply online during the NFO period.

This will shrink the time needed for CAMS to allot units to 1-5 days.
“This will be through its website and will be available
to subscribers and distributors of MFs,” a source told DNA. The firm is learnt to have made presentations to various asset managers, which are keen on the offering.

Explaining the product, the source said, “On the www.camsonline.com website, existing fund holders can put in their folio number and some of the details such name, address, numbers would be automatically filled in. For new customers they will have to fill up details, but still there is help in filling as when you write `10,000 in application, the amount in words is
automatically filled in.”

Upon filling the application online, one has to take prints and submit it at locations, which can be CAMS offices, asset managers and participating banks. The list of closest locations would be known while applying online. “As the time period is now reduced to five days the processing can be on a T+1 cycle (one day) after submission of physical documents,” the source said.

At present, fund houses collect physical applications from investors, send it to CAMS office in Chennai in the physical form and then process it to finally make the allotment. The online procedure will directly supply the information the same day to the Chennai back office and await the physical submission of forms.

The product shall be of use more in case of equity MFs than debt as the number of investors applying for debt MF NFOs may be in thousands, but in equity it is in lakhs due to high retail participation.

A MF official said, “We can manage with pre-NFO activities in the 15-day deadline set by SEBI from August 1, 2010. But processing of applications and allotting of units in five days was a task. People usually apply towards the end of the NFO period and then there is a lot of burden to handle. This should help us fix it.”

“However, the know-your-customer (KYC) verification wherein the identity of the person is to be verified before accepting a MF application will have to be completed either before or during applying online. You can subsequently do your KYC as well,” the source said.

Source: http://www.dnaindia.com/money/report_online-applications-to-help-mutual-funds-meet-new-nfo-timeframes_1433923