Leading stock exchange BSE is likely to roll out the paperless SIP facility for mutual fund investors by this month-end, a move that will drastically cut the registration time and also allow subscribers to transact through different payment modes including net banking.
As there will be no requirements of filling physical forms under the new facility, the chances of errors that presently result in rejection of many applications will also not exist.
At present, the paperless SIP (systematic investment plans) facility has been made available in simulation environment and will be made live tentatively by Diwali, the BSE spokesperson told PTI.
The new feature, which would be available through BSE StAR MF, would allow mutual fund distributors to register SIPs for their clients, who can pay SIP amounts through various modes including net banking.
So far, MF distributors have the option to register only Exchange SIP (XSIP) for their clients which allows for ECS (electronic clearing service) payment route.
“There will be no requirement of ACH (automated clearing house/ ECS or direct debit mandate form fill up under the paperless SIP, hence the related turnaround time of registration is completely eliminated,” the spokesperson said.
Accordingly, without disclosing the name, the spokesperson said the stock exchange has tied up with a leading payment aggregator to enable the mechanism.
The new facility would benefit investors as there would be no rejection due to error of filling and signing mandate forms under the new mechanism.
Importantly, it would allow investors to be in full control of their respective investments and payments.
Under the paperless SIP facility, the investors would receive an e-mail for all the payment modes, including direct pay, nodal account, one time mandate and cheque, after the SIP has been registered.
BSE StAR Mutual Fund is the largest MF distributor platform in India with more than 4 lakh SIPs per month.
In 2014, the Securities and Exchange Board of India (SEBI) had allowed mutual fund distributors to use the stock exchange platform for non-demat transactions as well for sale or redemption of these financial products.
The move was aimed at allowing mutual fund distributors to leverage the stock exchange platforms to expand their reach.