SEBI launches MITRA to Help Investors Track Dormant Mutual Fund Folios

The Securities and Exchange Board of India (SEBI) has launched a new online platform, MITRA (Mutual Fund Investment Tracing and Retrieval Assistant). This platform’s goal is to help investors trace and retrieve inactive or unclaimed mutual fund folios. The intention is to enable investors to overcome their problem of losing their mutual fund holdings due to outdated contact information or unawareness of investments held in their name.

Objective and Advantages of MITRA

The main goal of the MITRA platform is to provide investors with an industry-wide, centralized searchable database of unclaimed and inactive mutual fund folios. This will help investors in tracking lost investments, updating their KYC in line with the new regulations, and reclaiming any mutual fund units that they are rightfully owed. It also aims to minimize non-KYC-compliant folios so that investors are aware of regulatory standards.

Inactive folios are prone to fraudulent redemptions. By enabling investors to verify their holdings, MITRA enhances security and transparency in mutual fund investment. The system also enables tracing of investments made on his/her behalf by others so that genuine legal claimants can recover their money.

Criteria for Inactive Folios

As per SEBI’s circular, a folio is classified as inactive if there have been no investor-initiated transactions, financial or non-financial for ten years, despite the presence of a unit balance.

Strengthening Investor Protection

Besides launching MITRA, SEBI has also enhanced the mandate of the Unit Holder Protection Committee (UHPC) under mutual fund regulations. The committee will now also consider a review of dormant folios, unclaimed dividends, and unclaimed redemptions with an eye to proactive action shall be initiated so that such cases are reduced to a minimum.

Key players in the mutual fund industry, including Asset Management Companies (AMCs), Registrar and Transfer Agents (RTAs), Registered Investment Advisors (RIAs), the Association of Mutual Funds in India (AMFI), and mutual fund distributors, have been directed to raise awareness about this initiative

A Step Towards Improved Investor Awareness

With the launch of MITRA, SEBI aims to make tracing and recovery of investment in mutual funds by investors simpler and improve investor protection mechanisms. The scheme encourages KYC adoption and reduces unclaimed folios with higher transparency and efficiency in the mutual fund industry.