| The Securities and Exchange Board of India (Sebi) has rejected a plea by mutual fund houses for a phased implementation of the PAN (permanent account number) requirement for all fresh purchases made by investors from next month. |
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| The fund houses are now planning an aggressive strategy to bring about an awareness among retail investors to have PAN, the alpha-numeric tax assessment number of issued by the Income Tax department, from next month. |
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| Further, 30 mutual fund houses have also joined hands for a `KYC (know your client) project with CDSL Ventures (CVL) to collect and maintain a common data of mutual fund investors such as their name, address and PAN. |
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| Sources said Sebi rejected the plea in order to stick to the Budget announcement. |
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| Currently, a PAN card is mandatory for investing Rs 50,000 and above in a scheme. It was felt that several cash-rich investors were misusing the existing rules by investing just below Rs 50,000 per scheme in a multitude of mutual fund products, said sources. |
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| Though no reliable data are available, market players estimate that only around 12-13 per cent of the nearly three crore mutual fund investor accounts have a PAN. According to industry estimates, only 18 per cent of the 300 million bank account holders have a PAN card. |
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| Industry officials said CVL, which has centres at 486 locations spread across 146 cities in 23 states, would help in reaching out to mutual fund investors and register them on a one-time basis. |
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| The KYC project would ensure that investors do not have to provide their PAN card for every new investments they make in mutual funds, said officials. |
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| Fund houses would just have to check investor details with CVL for every new investments. In case of a change in address, investors would not have to intimate each fund house about the change in their address but they just need to inform CVL about it. |
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| CVL, in turn, would make all the necessary changes, which gets updated with the data available with the fund houses, said industry officials. |
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| Earlier, in a submission before Sebi, Association of Mutual Funds in India (Amfi) requested for a phased implementation of the mandatory PAN requirement over a period of next six months. |
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| The fund houses suggested that the minimum amount of investments for PAN be brought down from Rs 50,000 to Rs 25,000 in the first phase, before bringing it down further to include even smaller investments. |
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| The PAN requirement comes into effect at a time when the fund houses are planning aggressive strategy to make inroads into rural areas. Recently, ICICI-Prudential AMC and Reliance Mutual Fund launched a systematic investment plan for as little as Rs 50 and Rs 100, respectively. |
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| A P Kurien, chairman of AMFI, said, Any mutual fund investor, irrespective of the amount involved, will have to submit their PAN card details from July 2 onwards. In the securities market, everybody has a PAN and it will now be applicable for mutual funds as well. |
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| Almost 70-75 per cent of our retail money comes from small town investors. Now with PAN card becoming mandatory from next month, it will definitely have an impact on our retail inflows from smaller towns, said a top official of UTI Mutual Fund. |
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| He also added, A large number of investors used to deliberately apply for Rs 40,000-45,000 to avoid income-tax departments attention. |
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| Added Pankaj Razdan, managing director of ICICI-Prudential MF, Getting a large number of retail customers for an inclusive growth will be a tough job now. Apart from educating people about mutual funds, it will now be required to create awareness about having a PAN card as well. |
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| In April, the market regulator issued a circular stating that the permanent account number (PAN) would be the sole identification number for all transactions in the securities market. |
