In June last year, Polaris Financial Technology was chosen to develop the platform, envisaged as a one-stop investment solution to mutual fund investors. In 2012, Amfi had reportedly shortlisted as many as nine vendors to develop the software for the platform. The MF Utility platform has run into considerable delays Amfi had earlier planned an April 2012 launch and later postponed the date to April 2013.
Mutual fund houses are expected to pay R5 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 that bigger fund houses will have to pay more than the smaller fund houses to use the platform.
The centralised infrastructure will help fund houses save on transaction costs and provide a one-point platform for investors to connect to fund houses, said Anutosh Bose, the chief operating officer, LIC Nomura MF.
A single account number will be created, which can be used to invest across MF schemes of all the fund houses. This will save time used on paperwork. Also, a single login will do away with the need of separate login ids and passwords for different fund houses. With 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 said 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. Under the new system, all fund houses will have to upload client and distributor details on the utility platform and this has raised concerns over data confidentiality among some industry participants. Also, distributors fear the direct option provided to investors via the online platform, coupled with the ease of transaction on the platform, could 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 industrys AUM (excluding fund of funds) for the three months ended March 2014.