According to V Ramesh, the managing director & CEO at MF Utilities India, these 22 fund houses represent 88% of the industry AUM. The platform is currently under User Acceptance Testing (UAT), the last phase of a software testing process. Another two fund houses are expected to join soon, said Ramesh.
Mutual fund houses are expected to pay Rs 5 lakh as initial capital for the MF Utility platform. In addition, they will have to shell out money based on the number of transactions routed through the platform. This could mean bigger fund houses will have to pay more than the smaller fund houses to use the platform.
The MF Utility platform has run into considerable delays. Amfi had earlier planned an April 2012 launch and later postponed it to April 2013. In June last year, Polaris Financial Technology was chosen to develop the platform.
The platform promises to offer benefits to investors and distributors. A single account number will be created, which can be used to invest across MF schemes of all the fund houses. This will save the time spent on paperwork. Also, a single login will do away with the need of separate login ids and passwords for different fund houses. With a single-cheque payment for multiple transactions, the platform will do away with the need to issue separate cheques for separate schemes.
Distributors will benefit as they can upload their transactions on a single platform, thus, doing away with the need to hand in applications separately to the registrar & transfer agents. Experts say the platform will make all investor data available in a standard format. At present, even basic investor information such as name, address and PAN number are not shared in a standard format by R&T agents, they said.
There are concerns, however. For instance, distributors fear the direct option provided to investors via the online platform, along with the ease of transaction on the platform, may further fuel the migration to direct plans among retail investors and high net worth individuals, leading to a loss of distributor commissions. Direct plans contributed 33% of the industry's AUM (excluding fund of funds) for the three months ended March 2014.