Weekend Bytes
Digital mode – ON
“Who is responsible for the fastest technology adoption in a company?
- Chief Executive Officer (CEO)
- Chief Technology Officer (CTO)
- Coronavirus
- Board of Directors
The correct answer is c. Coronavirus.”
However sarcastic the above may sound, there is a grain of truth in it. As a response to the global pandemic, governments the world over resorted to something unimaginable – total lockdown.
Since everyone was locked inside their homes, work-from-home was not an option, but a compulsion. At the same time, it was only possible if everyone adopted technology with immediate effect. Meetings and conferences became virtual, and financial transactions became digital. This was not restricted only to corporations, but mattered to individuals, too.
Financial transactions
Imagine the months of April and May 2020, the early phase of the lockdown. In such a strict lockdown, withdrawing money from investments made in popular avenues like gold or real estate was impossible. At the same time, financial markets were fully functional and that allowed withdrawals. However, there was a small catch here. Transactions were possible only in the digital form at most places, since offices were closed due to the heightened risk of infections.
Even though the offices would open eventually, social distancing would become a norm in order to ensure no infectious disease spreads. Digital transactions are the future that has already arrived.
As seen from the chart below from the National Payments Corporation of India, the UPI transactions grew rapidly between April 2020 and April 2021, in terms of both value and volume. The digital age has truly arrived.
Solutions available for mutual fund transactions
In the mutual fund space, almost all the transactions can now be done digitally. First time investors can even get KYC done digitally, which means entire account opening process is possible to be completed without a paper.
There are many options for transactions in mutual funds:
- Websites of the Asset Management Companies (AMCs), or Mutual Fund Distributors, or SEBI registered investment advisers. For example one can visit the website of HDFC Mutual fund (www.hdfcfund.com) and carry out various transactions. The website allows existing as well as new investors to register and start transacting. All types of commercial transactions, lump sum transactions like purchase, redemption, switch as well as systematic transactions like SIP, STP, SWP can be carried out.
- Mobile apps created by the above, e.g. HDFC MFOnline App for Investors, which have similar functions.
- Mutual fund transaction platforms created by the two premier stock exchanges. According to an Economic Times article[1] dated 5th May 2021, BSE StarMF registered 1.11 crore transactions in April 2021, which was 75% higher than 63.17 lakh transactions registered a year ago.
- A platform created by MF Utility, a company promoted by the mutual fund industry.
Since each individual facility may have different features and limitations, one may need to do a careful evaluation of the alternatives before deciding.
Digitization of documents
Were you maintaining records in physical form? In such a case, it would have been difficult to retrieve/update some important ones during the lockdown. It is not just the lockdown, but during any natural calamity, be it heavy floods, a tsunami or an earthquake, many families have lost their financial documents and it is extremely challenging to retrieve the same to establish their ownership status.
Keeping digital backup of all the important documents becomes necessary in such a case. There are many facilities, apps and platforms available for this purpose.
Solutions available for mutual fund related documents
The important documents like home ownership documents may be scanned and kept in digital vaults like DigiLocker. However, for most financial documents, no separate arrangement may be required.
As far as mutual fund investments are concerned the industry has embraced the account statement format for years. At the same time, units can also be held in demat account, digital form. The mutual fund industry and the depositories provide a facility of consolidated account statement that investors can access through email. The various websites and mobile apps also may be used to access the details of holdings in mutual funds.
All in all, no additional efforts are required by the investors except linking the mutual fund investments and demat accounts to an email ID for digital access to the holding statements.
Digital transactions are environment-friendly
With the growing awareness about our responsibility towards the environment, it is important that we also reduce the use of paper to whatever extent. Electronic transactions help achieve the same.
In summary, please consider signing up for digital transactions and opt for email receipt of account statements. These two important steps would go a long way in helping you transact in and access your mutual fund holdings from the comfort of your homes.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY
