Paytm Money, one of India’s largest direct mutual funds (MF) selling platforms, has decided to discontinue selling mutual funds directly on its platform, and instead move investors to its broking business with demat accounts. Paytm Money asked customers to comply with additional KYC (Know Your Customer) norms as part of the platform’s shift to the services of BSE StAR, a MF transaction platform. This shift entails users getting a unique client code (UCC) and a demat account. Users need to complete the additional KYC steps to migrate by 25 July, or their future investments in MFs including SIPs (systematic investment plans), and redemptions will be stopped, the company said.
Paytm Money has been offering direct mutual fund purchases on its own platform using an RIA code. Now, Paytm Money will instead need to use the broker code for transactions on the BSE StAR platform. “We decided to discontinue offering advisory services and have to stop using the RIA code and mandatorily use our broking code to execute Direct Mutual Fund transactions. We are in the process of integrating with BSE StAR, the largest Mutual Fund execution platform in the country, to continue providing Direct Mutual Fund services to our investors and stay compliant as per regulations,” Paytm Money said in a post.
KYC necessary to ensure continuance of SIPs
BSE StAR being an exchange platform requires a UCC (Unique Client Code) to facilitate Direct Mutual Fund transactions by mapping a client and the exchanges. SEBI requires that these UCCs be mapped only to demat accounts. The markets regulator requires all Paytm Money Direct Mutual Fund investors to provide additional information as part of their KYC to be compliant with its regulations, and to register themselves as a broking client with Paytm Money by opening a Demat account free of cost. This process is necessary to ensure continuance of SIPs on the BSE StAR platform. “We have waived all charges & fees for this Demat account as long as clients are investing only in mutual funds. Further, the MF units will continue to be in statement of account (SoA) form and not in Demat form,” Paytm Money CEO Varun Sridhar said.
How can MF investors complete the additional KYC process?
To continue being compliant with SEBI regulations on Paytm Money and to be able to invest in SIPs in the future, users need to provide a couple of details in addition to what they have already submitted while completing their initial KYC with Paytm Money and open a free demat account. They need to upload a clear image of their signature on white paper and then click a live photo via the Paytm Money app. On completion of this integration, investors will have access to a lot more direct mutual fund schemes, enhanced features and whole new “Direct Mutual Fund” experience on the Paytm Money app.
Can users opt out of this process?
In case a user would still prefer to opt out, they can place a redemption request for their investments on Paytm Money platform, which will be processed in 3 trading days. Alternatively, they can redeem the same from AMC or RTA directly.