SEBI Proposes MITRA Platform to Trace Inactive Mutual Fund Investments

In a significant move to enhance transparency and investor convenience, the Securities and Exchange Board of India (SEBI) has proposed the development of a centralized platform called MITRA (Mutual Fund Investment Tracing and Retrieval Assistant). This initiative aims to help investors trace inactive and unclaimed mutual fund (MF) folios, ensuring these investments are not lost or susceptible to fraud.

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The platform, detailed in a SEBI consultation paper, is designed to allow investors to search for overlooked mutual fund investments across the industry. These inactive folios often result from investments made in physical form with minimal Know Your Customer (KYC) details, or when investors lose track of their holdings over time. Such investments, particularly in open-ended growth schemes, can remain dormant until approached by the investor, nominee, or legal heir for redemption or transfer.

SEBI revealed that,“The objective of the platform is to encourage the investors to search for forgotten MF investments and update KYC as per the current norms.”

The MITRA platform will be jointly developed and hosted by two Qualified Registrar and Transfer Agents (QRTAs)—CAMS (ComputerAge Management Services Ltd) and KFin Technologies Ltd. It will be accessible through multiple channels, including the websites of MF Central, AMCs (Asset Management Companies), the Association of Mutual Funds in India (AMFI), and SEBI itself. This ensures wide reach and ease of access for investors.  

A key feature of MITRA is its focus on investor empowerment. It aims to not only help trace inactive investments but also encourage investors to update their KYC details as per current regulations. This initiative seeks to reduce the risk of fraudulent redemptions and address issues stemming from incomplete or outdated information, such as the absence of PAN, email IDs, or valid addresses.

SEBI clarified that inactive folios are defined as those where no investor-initiated transactions, whether financial or non-financial, have occurred in the past 10 years, but the units remain invested. The regulator also noted that there would be no impact on folios where investors are aware of their holdings and have chosen to remain invested.  

In addition to locating forgotten investments, the platform is expected to contribute to a more transparent and secure financial ecosystem. By reducing the number of unclaimed mutual fund folios, MITRA aligns with SEBI’s broader objective of enhancing investor confidence and safeguarding their interests.  

To ensure robust operations, the platform will comply with SEBI’s stringent guidelines on cyber resilience and system audits. It will also adhere to standards for Business Continuity Planning (BCP) and Disaster Recovery (DR), ensuring uninterrupted service in the face of technical or operational challenges.  

SEBI has invited public comments on the proposal, with the consultation period open until January 7. 

In Conclusion 

SEBI's proposed MITRA platform is a proactive move towards addressing the issues that investors confront while tracking and reclaiming dormant mutual fund investments. SEBI's goal in developing a consolidated, safe, and accessible solution is to empower investors while also fostering greater openness and trust in the mutual fund sector. Once adopted, MITRA has the ability to streamline operations, reduce unclaimed folios, and protect investments, resulting in a more efficient and investor-friendly financial environment.