SEBI Proposes Platform To Trace Inactive And Unclaimed Mutual Fund Folios

The Securities and Exchange Board of India on Tuesday proposed a new service platform called MITRA to help investors trace inactive and unclaimed mutual fund folios. The platform gets its full name based on its utility, that is, Mutual Fund Investment Tracing and Retrieval Assistant.

MITRA has been proposed to help with concerns over investments that investors may have lost track of over the years.

The regulator observed that over time, mutual fund investors often forget about their investments, especially when they were made in physical form with minimal Know Your Customer details. These investments may remain in open-ended growth option mutual fund schemes indefinitely, unless the investor, nominee, or legal heir approaches the Asset Management Company for redemption, transfer, or transmission. 

Additionally, inactive folios might not be reflected in a unitholder's Consolidated Account Statement due to missing PAN, email, or address details. In such cases, these inactive folios can become vulnerable to fraudulent redemptions. SEBI has proposed MITRA to provide protection from such situations.

The platform is proposed to let investors find previously overlooked investments or those made by others on their behalf, for which they might be the rightful claimants. 

It is also designed to encourage investors to update their KYC information, which would in turn reduce the number of non-compliant folios. By providing a searchable database, MITRA will help reduce the number of unclaimed mutual fund folios in the market. 

The platform aims to contribute to a more transparent financial ecosystem and serve as a reliable tool for locating inactive or unclaimed mutual fund investments.

SEBI has invited public comments on the draft circular, and investors, stakeholders, and organisations have until Jan. 7, 2025, to submit their suggestions.