Distributors are staying away due to misconceptions: CEO MF Utilities

In its eight months since the launch, MF Utilities – the shared services initiative rolled out under the aegis of AMFI – has been able to service requests worth Rs 173 crore worth of assets. In a tete-a-tete V Ramesh, managing director and CEO of MF Utilities India shares with Khyati Dharamsi how the platform is changing the MF industry landscape and facilitating deeper penetration across the country.

What kind of response has the MFU platform seen?
The platform was launched in January 2015, but has been fully operational since March 2015. Since then we have been able to log in 18,000 common account numbers and are adding 3,000-4,000 accounts each month. This is despite the fact that no advertisement campaigns or major marketing initiatives have been undertaken to promote the benefits of using MFU for mutual fund transactions.
Since launch we have facilitated transactions worth Rs 172 crore of which Rs 10-12 crore have been made into liquid fund alone by retail investors. We are logging in 5,000-6,000 transactions each month.

Are investors investing directly too?
We recently received a transaction worth Rs 5 crore, which was directed by a customer. There are many such transactions which are initiated by the customer himself.

Are there select pockets from where transactions are being logged in?
Surprisingly, the participation is better from locations beyond the top 10 cities. We have just seen a transaction from Chachar in Assam. We have seen transactions from other smaller cities and towns such as Basti, Dumka, Bellary, Bardoli, Naliya, Bhavnagar, Jhansi, Trichur and many others. In fact, the transaction from Bardoli has come in even through there is no point of sale within the 10 km radius. The distributors are able to scan the transaction and put it in the system. Transactions are being logged in even on Sundays, which could never be facilitated earlier.

How many schemes are being transacting in per form?
One of the major USPs of the MFU platform is that one can invest in multiple schemes across fund houses using a single form and a single cheque. We have noticed that each form is being used to transact in an average of 2.5 schemes. This number is higher at three schemes per form for systematic investment plans (SIPs).

Only 25 of the 44 AMCs have registered on the MFU platform. What is holding others back?
The 25 AMCs that have agreed to the participating MFs constitute about 94% of the industry assets under management (AUM). We are in the process of adding one more AMC and the modalities are being worked out. An important step of registering as a participating AMC is that they need to be a stakeholder in MF Utilities India Pvt Ltd. The amount of Rs 5 lakh is immaterial. But, AMCs, which have a foreign partner, need to get various approvals before being a shareholder in MFU. The associate company's nod is what is holding the AMCs such as HSBC, JP Morgan, DHFL Pramerica and the likes to participate.

Is there a threat to platforms such as iFast, NJ Invest once distributors lap up MFU services?
Not at all! In fact, the MFU platform would facilitate the platforms such as iFast, NJ Invest, FundsIndia to serve their sub brokers better. Today they need to deal with four registrars and transfer agents. With this industry infrastructure in place they would have the ease of submission of forms and documents to just one entity.

In spite of thousands of registrations, why are only 450 distributors active on the platform?
There is a misconception that using a single click we will transfer the AUM to direct mode. They don't realise that if the customer wants to do it without the MFU platform too there is a single form using which he can convert the entire AUM to direct. They need to understand that we are not a direct selling platform. We are an industry infrastructure, bringing the AMCs, distributors, registrars and transfer agents and investors on a single platform with an objective to reduce the cost of investments into mutual funds. Such misconceptions are forcing some distributors to avoid MFU channel. However, there are many others who we interact with. A large distributor would be offering online transaction facility for its customers on its website using the MFU platform. Several such exclusive arrangements are being considered and should be launched soon by distributors.

Any new initiatives in the pipeline?
On November 5, 2015 we would be launching two new services for distributors – PayEz and TransactEz. Under PayEz, a distributor can get a mandate from the investor for a particular amount, which can be used to transact over a period of time. So, if you get a mandate to invest Rs 1 lakh, the same can be utilised to transact worth Rs 50,000 today, Rs 5,000 later and so on. The per-day maximum limit for transaction would be Rs 1 lakh per CAN. Under TransactEz, you can call up a distributor and a purchase, switch, redeem any transaction can be done using the PayEz reference number and can be approved without any paper work.

How would MFU infrastructure help ring in transaction through e-tail?
Our platform has been built in a way that e-retailing of mutual fund (selling funds through Flipkart, Amazon) would be just a plug and play step away. Once the regulator Securities and Exchange Board of India (Sebi) – which is mulling the use of e-retail channel for selling mutual funds – gives its go ahead for e-retailing of mutual funds, we should be able to roll it out within a month. In fact, there is another player in the e-commerce field which we are in the process of signing in.