Purchase of Mutual funds through cheque book in Circa 2024

 

I cannot recollect when I had last used a cheque to purchase mutual fund units, but certainly I had started my journey with mutual funds firmly with a cheque deposit in Circa 1993 , the year when private sector mutual funds burst onto the scene in India. Slowly I  started  investing almost entirely  through SIPs and the cheque issuance reduced, however was never fully eliminated as the online world of mutual fund investments  did not exist till 2010 if I can recall the year correctly  . Then COVID struck and the offline world of MF investments got blanked out , everything was done online and rather seamlessly too . Recently I decided to go the traditional offline way for routine purchase of mutual fund units only for one reason -  I could see that a single online transaction could not exceed the NEFT daily transaction of  ₹ 10 lakhs  and even this figure I was not very comfortable doing such a transaction online and decided to go the old traditional cheque deposit method to purchase mutual funds this time around . It was a surprise to see that the offline methods are quite inconsistent and differs widely  from the written instructions provided  in the form. In Ghatkoper East just adjacent to the Central Railway station there is  building called Platinum  mall which has since been converted into a mini fintech centre and houses my  nearest centre of CAMS and Kfintech,  the two registrars for all the 44 mutual fund houses in India . In addition, MF offices of ICICI Prudential , SBI MF and HDFC MF are housed in the adjacent building , so effectively one visit to this location will take care of all your MF needs for all the funds in India. So here's my summary of transactions done at CAMS , Kfintech , SBI mutual fund and HDFC mutual fund

(a) Even though the application form clearly specifies the entity to whom the cheque payment has to be made eg SBI Mutual fund A/C Liquid Fund direct , when you reach the ISC ( investor service centre ) they tell you to change the name on the cheque and the reason given is a weird one . At SBI MF they told me , if you mention SBI mutual fund on the cheque payee column , the cheque will go for collection and transaction will be effected only the next day , so they suggested changing the payee name to SBI Liquid fund direct and this would be debited immediately by the payee bank . So I issued another cheque and debit was done in about 30 minutes and an account statement showing this transaction was in the email box by 1600 hrs the same day , by far the most efficient service that I could see amongst all the transactions that I did over the last one week .

( b) At HDFC mutual fund,  they told me they could not accept the form which I had downloaded from the CAMS website( as below ) as it showed  CAMS as the distributor even though it was an application for a direct fund and they provided me with a form of their own😒 Also they asked me to wait till the cheque deposit was done at the bank next door , just to pre-empt any query from the bank on the cheque itself , something they said happens all the time . Though there was no query from the bank , the girl from HDFC MF called up later in the day to say that the bank was  experiencing some technical issues and the cheque would be cleared only the next day .

 

  ( c) The  Kfintech office  true to form was decidedly the worst ; their office is just a collection centre after which they only forward the application to their main office in Nariman point, so the cheque amount is debited from your account only after 2 working days  . In all other offices I found the cheque is deposited immediately within about two hrs of the cheque receipt at the respective office

(d) CAMS was another funny one - I was using a form downloaded from the CAMS website detailing the fund that I was investing in but they claimed they could not give me a receipt for the MF form deposited . When I said all I required was   a photo of the receipt time stamp of the MF form submitted, they claimed that they had instructions not to allow forms to be photographed with any  phone camera 😘 As soon as I raised a ruckus on this, they hastily changed their stance and allowed me to take a photo of the form that was submitted . Thankfully cheque was deposited for clearing in about 2 hrs from the form submission .

So what's the final summary for offline mutual fund transactions done after a gap of over 15 years  - well the mutual fund offices are certainly more helpful than the two Registrars( CAMS and Kfintech )  but some funds like Mirae Asset MF rely entirely on their registrars for the forms submission process  and do not have any of their own offices even in a city like Mumbai . The  method of cheque collection still differs widely and the RBI designated Positive Pay system for cheques is not being used at all ( this system requires the cheque details to be entered in your internet banking account and only if the details match is  the cheque  sent for clearing ) the system is bypassed by sending the cheque for account transfer and not for cheque collection , reason provided is it ensures prompt clearing of the cheque submitted 😘