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Published on 9/10/2019 1:18:08 PM | Source: Live Mint

How to add or delete a bank account to manage your mutual fund transactions

Posted in Mutual Fund Analysis| #Mutual Fund

Mutual fund investors are required to provide details of the bank account through which they will conduct their financial transactions such as purchases, redemptions, receipt of dividends and such. This information has to be mandatorily provided at the time of making the initial purchase of mutual fund units and is captured under the investor’s folio. Any change in the bank account has to be informed to the mutual fund company immediately so that there are no payout delays.

To make it easy for investors to manage their financial transactions, mutual fund companies provide the facility of registering multiple bank accounts—up to five for individual investors. This can be done either at the time of making the initial investment or subsequently after making an initial purchase. You can register the accounts by simply using the multiple bank account registration form. But remember, the first or sole unit holder should be one of the holders of the bank account that is being registered.

Details to be provided

If you are an existing investor, you need to provide the folio number. New investors need to provide the application form number. Permanent account number (PAN) of the first holder of the mutual fund investment also has to be provided to link the bank accounts to the investor. For each bank account that has to be added, the bank account number, type of account (whether savings or current), bank name, branch, city, pin code and IFSC code has to be provided. Supporting documents that need to provided include a cancelled cheque leaf with the name of the first unit holder pre-printed on it or bank statement reflecting the name of account holders, account number and address or passbook page reflecting the account number, name and address of the account holder. The form also has to be signed by all the folio holders as per the mode of holding.

Next, you need to specify one of the registered bank accounts as the default bank account into which the mutual fund company will credit future redemption and dividend proceeds. You can change the default bank account at any time by using the same form. Investors can also add or delete bank accounts to the folio at any time within the limit of five bank accounts. But if you want to delete the default bank account, then the mutual fund company will only process it after the investor has designated another registered bank account as the default account. A written confirmation of the addition or deletion or change of bank account will be dispatched to the investor within seven calendar days of the receipt of the request.

Redemption

If a change of bank mandate request is received simultaneously with a redemption request, then the account to which the credit has to be made should be specified in the redemption request. If the bank account to which the credit has to be made is not specified in the redemption request then the credit will be made to the default bank account mentioned in the MBM form after the cooling off period of 10 calendar days. This bank account will become the default bank account for all future credits unless otherwise specified. If the multiple bank account registration form does not specify a default bank account either, the credit will be made to the existing default bank account within the normal turnaround time for redemption transactions.

The bank accounts through which investors make payments for their purchase transactions should also ideally be through the registered bank accounts so as to avoid fraudulent transactions and rejections due to any mismatch of details