You won’t be able to redeem mutual fund units online without this now

If you are a mutual fund investor who uses online platforms to make financial transactions such as redemptions, invest via Systematic Transfer Plan (STP), make switch requests etc., then from June 1, you will be able to do such transactions only if they are validated via two-factor authentication (2FA). This means that a one-time password (OTP) will be sent to the investor’s registered mobile number/email ID and an investor will be required to enter that OTP online before the transaction is processed.

Mutual fund houses are sending reminder emails to investors asking them to update their mobile number/email IDs in the folios so that they can continue to do redemptions, switch etc.

As per email communication sent by Franklin Templeton mutual fund sent to its investors:
To ensure the safety of online transactions for all your investments with Franklin Templeton, we will soon be requesting for the input of an additional One Time Password (OTP) for the following online transactions:

  • Redemption
  • Switch
  • Systematic Transfer Plan (STP) Registration
  • Systematic Withdrawal Plan (SWP) Registration

This additional OTP will be sent to the contact details (mobile number and / or email ID) registered in the respective customer folio with us. This initiative is in accordance with the recent SEBI circular on Two-Factor Authentication, effective 1st June 2022.

Similarly, has sent an email communication to its customers:
Securities and Exchange Board of India (SEBI) has directed the Mutual fund distributors to have a 2-Factor Authentication (2FA) for all redemptions and switch outs effective from June 1, 2022. This 2-Factor Authentication has to be done on the mobile number updated in the Mutual Fund Folio. To honour the redemptions and switch outs, please update the same mobile number updated in the Bank Account mapped to the Folio. We would send the OTP for the 2FA to the mobile number updated in the Bank records. In case there is a mismatch between the mobile numbers on which the OTP is sent and the AMC records, the transaction will be rejected. For any query or assistance, you may contact our Customer Care on 1860 120 7777. The above may be ignored if the mobile number updated in the Bank and the Mutual Fund folio is the same.

Ashwin Karmarkar, Partner, Vintage – a mutual fund distributor says, “As per the Sebi guidelines, mutual fund investors, those who regularly use the online platform to redeem their investment or switch to different mutual fund schemes etc., must have their mobile number/email ID registered in their investments. This is because their transaction will be authenticated via an OTP sent to their registered mobile number and email ID. If the OTP verification is not done, the transaction will not be processed.”

How to update mobile number in mutual fund investments

Others like

Mutual Fund, Mirae Asset Mutual Fund etc. have also sent similar emails to investors informing them about 2FA on online transactions of redemption, switch, STP and SWP registration. The OTP will be sent on the customer’s registered mobile number and email address.

An investor whose mobile number is not registered in their mutual fund investments can do the same via these routes:

  • Submitting physical application to fund house: An individual can submit an application to every mutual fund house where he/she has investments. The mutual fund house will update the mobile number in their records. Once the updation is done, then the investor will be able to make online transactions.
  • Updating mobile number in KYC records: If an investor updates his/her mobile number in the KYC records, then wherever his/her mutual fund investments are, they will update the mobile number. However, do note that this is a time-consuming and longer process compared to submitting the application directly to mutual fund house.
  • Submit request to CAMS: An individual can also submit mobile number updation request online via CAMs. Here is the link to do the same:

CAMS is the Registrar and Transfer Agents (RTA) for mutual fund houses that handles investors’ records on behalf of mutual fund houses. An individual will be required to mention his/her PAN number and correct/update the mobile number to update it. Do note that this online process will ask investors to enclose proof of KYC verification.

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