MITRA Platform To Help Trace Inactive Mutual Fund Investments

Moneylife Digital Team 13 February 2025

Investor Interest

Market regulator Securities and Exchange Board of India (SEBI) has introduced the mutual fund investment tracing and retrieval assistant (MITRA) platform to help investors locate inactive mutual fund folios.

The platform will be jointly managed by two qualified registrar and transfer agents (QRTAs), namely Computer Age Management Services Ltd (CAMS) and KFIN Technologies Ltd, who will act as agents of asset management companies (AMCs).

The MITRA platform aims to assist investors in tracking inactive mutual fund folios where no financial or non-financial transactions have occurred for 10 years, but unit balances still exist.

The platform is expected to become operational within 15 working days from the issuance of SEBI's circular.

Many investors unknowingly leave behind inactive mutual fund folios due to various reasons, including losing track of investments or personal circumstances like demise. Open-ended schemes can remain perpetually invested until the investor specifically requests redemption or transfer, creating a significant challenge in investment management.

An inactive folio is defined as an investment account where no investor-initiated transaction has occurred in the past decade, yet a unit balance remains. These dormant investments pose potential risks, including vulnerability to fraudulent redemptions.

According to SEBI, the MITRA platform will help investors rediscover overlooked investments and allow legal claimants to identify investments made by others on their behalf. SEBI anticipates that this initiative will encourage investors to complete their know-your-customer (KYC) formalities, thereby reducing the number of non-KYC-compliant folios and unclaimed investments.

The circular highlights that, over the years, investors may lose track of their mutual fund investments due to purchases made in physical form with minimal KYC details. Open-ended growth option mutual fund schemes can remain invested indefinitely unless the investor, nominee, or legal heir approaches the AMC for redemption, transfer, or transmission.

In cases where essential details like permanent account number (PAN), email ID or a valid address are missing, the mutual fund folios might not appear in the investor's consolidated account statement (CAS). This situation could lead to investors losing track of their investments or even remain unclaimed due to the demise of the unit holder.

The MITRA platform will be hosted by CAMS and KFIN Technologies and will be accessible through links on the websites of MF Central, AMCs, the Association of Mutual Funds in India (AMFI), the two QRTAs, and SEBI.

Both QRTAs will be jointly and severally responsible for ensuring compliance with all applicable regulations, including conducting system audits and cybersecurity audits. They must also ensure that the platform adheres to SEBI's guidelines for business continuity plan (BCP) and disaster recovery (DR), as specified for market infrastructure institutions (MIIs).

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