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Mutual Fund Application form
Each mutual fund scheme has a form that investors need to fill. If you start investing in the systematic investment plan (SIP), you need to fill in two forms: one to open an account with the mutual fund and the other to specify your SIP details such as frequency, monthly installment amount, and date on which the SIP sum is to be invested.
Different ways in which you can invest in Mutual Funds
Like the many mutual fund schemes to choose from, there are several ways in which one can invest in them. One can invest online or offline or in direct as well as regular plans.
- Direct Plan: Since January 1, 2013, all mutual fund houses have rolled out a new plan under all of their existing fund schemes-the Direct Plan. These plans are targeted at investors who do not make their mutual fund investments through distributors and hence have a lower expense ratio compared to existing fund schemes of the AMC. This means that you, as an investor, will get an opportunity to earn a slightly higher return from your mutual fund despite it having the same portfolio. The direct plans will not charge distribution expenses or commission, resulting in these plans having lower annual charges and eventually, a different (higher) NAV compared to the regular plans. You can easily get the information about the respective mutual fund on their direct website.
- Mutual Fund Utility –The MFU (Mutual Fund Utilities) is a shared platform used by all the AMCs in India. Now, the MFU has made it easier for all the mutual fund investors to manage and track their personal investments on the shared MFU platform. This can be done using the CAN (Common Account Number) service, wherein an investor needs to self-register on the MFU platform and will then be able to use their platform for tracking their own fund’s performance.
- CAMS KRA –myCAMS is a web-based application developed by CAMS for investors to enable them to create a single login user id through CAMS website or through Mobile App Version and enable them to transact across all participating Mutual Funds who have authorized CAMS
- Through intermediaries: There is a wide variety of intermediaries available. These include most banks, distribution companies having a national or regional presence, some stockbrokers (including online brokers) and a large number of individuals and small financial advisory companies. All intermediaries have to be registered with the Association of Mutual Fund in India (AMFI), which also maintains a searchable online directory at www.amfiindia.com. The website also lists intermediaries who have been suspended for malpractice to protect investors from going back to them. The intermediary normally brings the required mutual fund application form, helps you fill the forms, submit the forms and other documents to the Mutual Fund office and sometimes even brings in the Account Statement. But, all these services come to you for a fee. Typically, agents charge a flat fee for these services.
- Through IFAs: IFAs are independent Financial Advisors, who are individuals who act as agents to facilitate a mutual fund investment. They help you fill the application form and also submit the same with the AMC.
- Directly with the AMC: You can invest in a mutual fund scheme by investing directly through the AMC. The first time you invest in any Mutual Fund, you may have to go to the AMC’s office to make your investment (because of submitting your KYC document). Subsequently, future investments in different fund schemes of the same AMC can be made online (provided this facility is offered by the AMC) or offline, using the folio number in your name. Some AMCs may extend the facility of sending an agent to help you fill the application form, collect the cheque and send the acknowledgment.
- Through Online Portals: There are several third-party online portals, from where you can invest in various mutual fund schemes across AMCs. Most of the portals have tie-ups with banks to facilitate easy fund transfer at the time of investing. These portals charge an initial fee to set up an account and facilitate future smooth online access to invest and redeem your investments.
- Through your bank: Banks are also intermediaries who distribute fund schemes of different AMCs. You can invest directly at your bank branch into fund schemes that you wish to invest in.
- Through Demat and Online Trading Account: If you have a demat account, you can buy and sell mutual funds schemes through this account.
Different Ways in which you can make the payment for your Mutual Funds
Cheque – You can draw a cheque in the name of the Mutual Fund AMC along with the exact scheme name and deposit with the mutual fund application form with the mutual fund company office or other agents/intermediaries – depending upon the option you are selecting to invest your money in.
Electronic Money Transfer
The traditional way to transfer money from one bank account to another is to write a cheque and then deposit it. The advent of technology has ensured that one need not go through such a tedious process anymore. Over the years, the RBI has introduced several steps that have resulted in the paperless transfer of funds through electronic funds transfer (EFT). There are several other acronyms that one comes across, especially when transferring funds online or through electronic clearances such as RTGS, NEFT, IMPS, and ECS. Each of these plays an important role in ensuring your investments are timely and you do not lose time when investing. Each of these options plays a role in the way your investments are treated in a mutual fund.
Electronic Clearing Service (ECS): ECS is an electronic mode of payment or receipt for transactions that are repetitive and periodic in nature. For this reason, ECS is most preferred and useful when investing through SIP. Essentially, ECS facilitates the bulk transfer of money from one bank account to many bank accounts or vice versa. Primarily, there are two variants of ECS-ECS Credit and ECS Debit. ECS Credit is used by an institution for affording credit to a large number of beneficiaries having accounts with bank branches at various locations within the jurisdiction of an ECS Centre by raising a single debit to the bank account of the user institution.
ECS Credit enables payment of amounts towards distribution of dividend, interest, salary, pension, etc., of the user institution.ECS Debit is used by an institution for raising debits to a large number of accounts maintained with bank branches at various locations within the jurisdiction of an ECS Centre for single credit to the bank account of the user institution. ECS Debit is useful for payment of mutual fund SIPs because these are periodic or repetitive in nature and payable to the user institution by a large number of investors.
National Electronic Fund Transfer (NEFT): This is a nationwide payment system facilitating one-to-one funds transfer. Under this scheme, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the Scheme. Individuals who do not have a bank account (walk-in customers) can also deposit cash (up to R50,000) at the NEFT-enabled branches with instructions to transfer funds using NEFT. At present, NEFT operates in hourly batches – there are twelve settlements from 8 AM to 7 PM on weekdays and six settlements from 8 AM to 1 PM on working Saturdays.
Electronic Funds Transfer (EFT): This is a paperless method by which money is transferred from one bank account to another bank account without the cheque or currency notes. The transaction is done at bank ATM or using Credit Card or Debit card. In the RBI-EFT system, you need to authorize the bank to transfer money from your bank account to other bank accounts that are called a beneficiary account. Funds transfers using this service can be made from any branch of a bank to any other branch of any bank, both inter-city and intra-city. RBI remains intermediary between the sender’s bank called as remitting bank and the receiving bank and affects the transfer of funds. Using this method, funds are credited into the receiver’s account either on the same day or within a maximum period of four days, depending upon the time at which the EFT instructions are given and the city in which the beneficiary account is located. Usually, the transactions done in the first half of the day will get first priority of transfer than the transaction done in the second half.
Real Time Gross Settlement (RTGS): The real-time gross settlement is an instantaneous funds-transfer system, wherein the money is transferred in real time. With this system, you can transfer money to other bank accounts within two hours. In this system, there is a limit that you have to transfer money only above Rs2 lakh and for money below Rs 2 lakh transactions, banks are instructed to offer the NEFT facility to their customers. This is because; RTGS is mainly used for high-value clearing. The RTGS facility is available only up to 4:30 PM on weekdays and up to 2:00 PM on working Saturdays.
Interbank Mobile Payments Service (IMPS) Facility: IMPS is a platform provided by National Payments Corporation of India (NPCI). IMPS allows existing unitholders to use mobile technology/instruments as a channel for accessing their bank accounts and initiating interbank fund transaction in a with convenience and in a secured manner. It allows investing 24*7 via mobile phone.
Wealth Cafe Actionable – There are many options and ways to invest in a mutual fund. If you have the expertise to select a scheme by yourself then go for a direct option or CAMS KRA to invest directly in the scheme. Where you going through an intermediary to invest in a Mutual Fund, you must always understand their basis of selecting a particular scheme for you and review the same at your end before finalizing the option they have selected for you.