Markets regulator SEBI has suggested the establishment of a Mutual Fund Investment Tracing and Retrieval Assistant (MITR) in an effort to increase transparency and assist investors in recovering their unclaimed mutual fund investments.
To facilitate the management and transfer of financial assets in the event of a death, market regulator Sebi has suggested utilising DigiLocker, a government digital storage system. Financial documents, such as statements for mutual funds and demat accounts (which hold stocks), are supposed to be safely kept in DigiLocker.
Easy of transfer to designated succesor
DigiLocker will automatically update the deceased person's account and alert the designated successor (such as a family member) to handle the assets.
The nominee will be able to work with the appropriate agencies to transfer the assets and access the deceased's financial information in this way. Sebi's mission is to make sure that assets are distributed to the appropriate heirs and to stop unclaimed assets (such as stocks or funds) from being left behind.
Need of the tracking system
Many investors eventually lose sight of their mutual fund investments, particularly those made in physical form with scant KYC information. Due to out-of-date information, such as a missing PAN, invalid addresses, or no email address, some investments are still inactive.
These folios are frequently overlooked because of this disconnect, which keeps them from showing up in consolidated account statements.
Unless the investor, nominee, or legal heir contacts the appropriate Asset Management Company (AMC) for redemption or transfer, investments in open-ended growth schemes may remain dormant indefinitely.
Such folios are susceptible to fraudulent activities because of the inactivity that may result from investors losing track of their investments or even the death of the account holder.
Functionality of retrievel mechanism
In order to solve this issue, SEBI has recommended that the MITR platform be developed and hosted by two Qualified Registrar and Transfer Agents (QRTAs): ComputerAge Management Services Ltd. (CAMS) and KFin Technologies Ltd.
Through links on important websites like MF Central, specific AMCs, AMFI (Association of Mutual Funds in India), and SEBI itself, the service would function as an industry-level searchable database.
