Skip to main content

Security tightened for your Mutual Fund investment

MUTUAL fund houses are increasing the security features related to investing in their funds to prevent frauds. One of the measures has been non-acceptance of third party cheques from November 15, 2010.

This will have a significant impact in ensuring investors get the units for the amount that they invest, but the mutual funds are not stopping there. They are also asking investors to change the manner in which they write the cheques at the time of investment so that there is adequate safety present here too.


Fraud: Fraud is one of the worries that investors face while investing in a mutual fund scheme. There have been instances where investors have given the application form with a cheque, but have found that the units have been allotted to someone else even though the money has been withdrawn from their accounts.


This happens because the application form of the investor is switched at the time of making the investment, so while the cheque amount goes from the investors' account, the name, address as well as bank details are of some other investor's.

At present, investors write the name of the scheme when they invest in it. Apart from non-acceptance of third party cheques, funds are now also asking investors to add an additional detail when they write a cheque for investment. There are a few variations in the form of the additional detail that will have to be added, but it has to be noted that all the funds might not allow for all the routes mentioned here.


PAN: Normally an investor writes the name of the scheme on the cheque when they invest their money into a mutual fund.

This process was enough for the amount to be used for the allotment of the units, but now, fund houses are asking for an additional detail beyond the fund name to be written on the cheque.


One of them includes the Permanent Account Number (PAN), which is a unique number for each investor.

Thus, this becomes a distinguishing mark for the investment and hence will be able to ensure that the investment amount is not credited to the folio of some other investor. The PAN of the first investor has to be mentioned and this can also be checked with the details that are recorded with the fund. In this case the details will be written as `ABC scheme a/c ­ XXXXXXXXX'.


Investor's name: Another measure that the mutual fund houses are asking investors to adopt is mentioning the name of the first investor after the name of the scheme in the cheque. This is done to ensure that some other person does not use the cheque for the purpose of depositing it into their account and thus perpetuate a fraud. The mutual fund on its part will credit the units only into the folio of the investor whose name is mentioned on the cheque after the scheme name.

This can be done by mentioning the following details -`ABC scheme a/c -Full name of the investor'.


Folio number: For existing investors the situation can be made easy with the use of the details of the folio number after the name of the scheme in the cheque. This is a number that is allotted to each investor by the mutual fund house when they make an investment with them so that the details can be easily accessed when required.

Existing investors who want to make additional investments with the fund can adopt this route too if the fund allows it and this will be another safety feature.


Again, the mention of the number ensures that the money is not appropriated by someone else even if the cheque falls into their hands and this is precisely what the mutual fund houses want.


This will be written as `ABC scheme a/c ­ Folio No'.

 

Popular posts from this blog

What are the factors affect the changes in Interest Rate of Fixed Deposits?

  What are the factors affect the changes in rate of Fixed Deposits? Fixed Deposits are now considered to be a very old fashioned method of saving, but still attract many investors since they have guaranteed returns at the end of the tenure of the investment at a decent interest rate. There are various factors that affect the rates of interest for a Fixed Deposit. Policies of the Reserve Bank of India   - The several norms and restrictions posed by the Reserve Bank of India , in order to gain optimum control over credit and inflow and outflow of fund throughout the country. The repo rate changes, cash reserve ration tends to change and these changes affect the banking products like Fixed Deposits, loans etc. Recession   - When unemployment in a country crosses the benchmark set Recession hits, and slowly the country faces an economic slow movement, affecting the purchasing power of the people in the country, forcing the Reserve Bank of India to release more funds in the financial marke...

Understanding Your Cibil Credit Information Report

   WE ARE all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it's the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender's decisions.    While other factors do play a part in the lender's decision, the Cibil Credit Information Report ( CIR ) plays a crucial role in a lender's decision to approve a loan application.    Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it's like a professor (the lender) punishing an entire class (borrowers) for the mischief played b...

Capital Protection Oriented Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Capital Protection Oriented Funds   Erosion of capital is one of the key concerns for investors wanting to invest in equity mutual funds. To address this concern, asset management companies have launched Capital Protection Oriented Funds (CPOFs). What are CPOFs? CPOFs are generally three to five-year, closed-ended funds where 70-80% of the portfolio is invested in fixed income securities, which mature on or before the scheme's tenure. The investment in fixed income securities grows to 100% at the end of the tenure, providing the investor with capital protection. The remaining portion (20-30%) is used to take exposure to equity, which provides the upside. Exposure to equities is either by directly buying equity stocks (plain vanilla CPOFs) or by b...

Mutual Fund Review: ING Dividend Yield

  ING Dividend Yield's small assets enable the fund manager to churn in impressive returns… Strategy The aim of the fund is to invest in stocks which offer a high dividend yield. This fund deploys a value based strategy which aims to gain from investing in fundamentally strong and free cash flow generating businesses. The scheme focuses not only on growth but also on the cash generated by the business, which mostly leads to stable returns even in volatile markets. This fund has a low volatility because of its investment in high yielding stocks. The scheme tries to include stocks that yield dividend above the dividend yield of the Nifty and stocks with liquidity, which throws up a universe of 150 stocks.   Our View Launched in October 2005, this fund invests at least 65 per cent of its assets in high dividend yield stocks. The fund has consistently maintained a mix of stocks across varying market capitalisation, with a higher tilt to mid caps compared to small caps. Howev...

Good Loan

Why Is It A Good Loan?: Loans against gold are cheaper and better than personal loans as the former are available at lower interest rates. In contrast, the interest rates on personal loans are not standardised and can vary from bank to bank. Also, a personal loan depends on a host of factors including, the borrower's salary, profession and the purpose for which the loan is being taken.      For instance, the interest rate on a personal loan of 5 lakh falls in a wide range of 15-30%. But loans against gold are available for as low as 11%. Secured borrowing such as a loan against gold, investments or property is cheaper because it is backed by some assets, which command a good value at any point of time. If the borrower defaults on the loan, the banks can liquidate the assets to settle the loan account.    Being a secured loan, the risk of default and credit losses is significantly lower in this loan compared to other forms of loan for personal use. Given the lower risk, gold loa...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now