How I struggled to change MF unitholder status after a death in the family

Published: August 10, 2023 at 6:00 am

Last Updated on January 1, 2024 at 9:32 am

Over the years, there have been innumerable discussions in AIFW (Facebook group, Asan Ideas for Wealth) about various aspects of mutual funds – their kinds, where to use them, what to buy, when to sell, how much returns to expect, SIP or not, active vs passive, etc. Yet one topic does not seem to get as much attention as it probably should: how to claim money invested in MFs on the death of unitholder(s)?

About the article: Authored by Anirban Ghosh, it was first published in AIFW and is reproduced with permission on the suggestion of group admin, Ashal Jauhari.

Many here have shown concern about the claim settlement ratios of life insurance companies while deciding which one to choose (how important that factor is or isn’t has also been discussed here). That concern is stemming from the worry about the experience a nominee could have to go through should there be a claim. So, on a similar note, should there not be worry about the experience nominees might have to undergo while claiming money from MF folios? More so, because for many, it is pretty likely that they have more money in MFs than what their life insurance policies shall pay.

Surprisingly, not just in AIFW, there seems to be a shortage of online content on this topic compared to others about MFs. Unfortunately, I have recently needed to deal with MF transmissions (that’s what the process is officially known as), though not as a nominee. And my that first-hand experience has led me to form certain opinions about this aspect. Obviously, my opinions are subjective, and not everyone would think similarly.

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The entire process of transmissions in MF is elaborately explained on the AMFI website. I’ll focus this post on my experience. That AMFI page is a must-read for every MF investor, though. I will also advise carefully reviewing the various forms attached, including the ready reckoner document.

I was having two kinds of jointly-held MF folios: one where I was the 1st holder and others where I was the 2nd, with there being a total of 2 unitholders in all of them. So I had to deal with (i) deletion of the 2nd holder’s name and (ii) transmission of units to the 2nd holder. I had those folios across ICICI, PPFAS, ABSL, HDFC, Quantum, and UTI.

Firstly, I had to figure out that for transmissions, the entire process is offline. MFCentral has a service category for transmitting units, but for all practical purposes, it’s useless because you’d still have to submit forms & documents physically.

I took up my transmission to 2nd holder cases first, as they seemed more critical. I had folios for such cases in ICICI, PPFAS, Quantum, and UTI. Instead of visiting multiple AMC offices, I visited the local CAMS and KFintech branches. (Luckily, in my city, they are in the same building.)

Submissions at CAMS were a breeze, but KFintech was a mixed experience. For Quantum, the person at the counter took a photo of me (from their webcam), as it seems that’s a requirement for Quantum while submitting any transmission form, which I found pretty odd. That KFintech office had a separate counter for UTI and the service there was most disappointing. The person seemed to have no clue how to deal with transmissions and started insisting that I submit an attested copy of death certificate even though I was giving an original certificate.

After some back & forth, I was asked to visit the UTI office some miles away. There, they insisted that I submit not only my PAN and Aadhaar copies (even though I was KYC compliant and was furnishing a KYC Acknowledgment) but also the PAN and Aadhaar copies of the deceased.

Arguing that such documents are nowhere mentioned in the AMFI guidelines for transmission did not help. Since I was not carrying the latter set, I had to revisit their office the next day. The new folios were transmitted within a week after submissions for all those folios across the AMCs.

However, post-transmission, redemption from the new folios was not allowed for 15 days. This practice does not seem to be documented anywhere, and the only helpful commentary I could find about that was a moneycontrol article.

Next, I took up my deletion of 2nd holder cases, for which I had folios in ICICI, PPFAS, HDFC, ABSL, Quantum and UTI. Submissions at CAMS were easy like before, as was for Quantum at KFintech. For UTI, given last time’s experience, I went directly to the UTI office. This time I was submitting copy of death certificate attested by a Notary Public, just as mentioned by AMFI, yet they insisted on getting the same verified & stamped from their own personnel, along with copies of PAN & Aadhaar for me & the deceased.

For ICICI, PPFAS, Quantum and UTI these transmissions got completed within a week of submission, but for ABSL and HDFC they did not. While from ABSL I got an automated notification email, there was no word from HDFC. ABSL’s email mentioned something cryptic about insufficient documents, which I knew for sure could not be the case, so I called up their Customer Care, where I was told someone from ABSL would call me back, which they did the very next day.

Their problem was with my KYC status (in which they were misinterpreting an old modification status as the latest KYC status), and after I sent them a document supporting my argument they promptly processed the transmission. For HDFC, I called up their Customer Care, they said someone would call back but no one did. So, after some more days I sent them an email, to which they replied and finally my transmission got processed. With UTI, even though my transmission got done, I was not able to do redemption even after 15 days, even when no bank account change had happened in the folio.

I sent them an email, they didn’t respond, I called their Customer Care, who asked to contact the branch where I had submitted the transmission form, I called that branch several times across 2 days but no one picked up the phones, I again sent them multiple emails, and finally the redemption problem was resolved.
The reason I went into this much detail about my experience with different fund houses is to illustrate the quality of service I got from each and their idiosyncrasies.

Apart from the standard link to SCORES, HDFC MF’s website does not mention what is their process to escalate a grievance internally. But ABSL, ICICI, PPFAS, Quantum do. UTI’s processes go over and beyond AMFI’s standard guidelines to the extent of being meaningless and frustrating, plus their Customer Care workflow leaves a lot to be desired.

I have been an MF investor for quite some years now, so I think I know my way around in this space. Yet I had to jump through so many hoops, even when I was a joint unitholder. And the process for transmission of units to nominees is even more cumbersome. More often than not, nominees are not used to mutual funds nor are tech savvy. So imagine how difficult it is going to be for them, unless very clear instructions are left behind.

Given these recent experiences, I decided to move out of UTI and HDFC MFs completely. I’d rather pay some capital gains tax now, than subject my nominee to similar experiences after my death. Are past experiences a good yardstick to predict the future? Not always, though it can be argued both ways. My opinions and decisions here are obviously mine and subjective.

This whole exercise has been an eye-opener for me, so I thought of sharing here in case it helps others. Do you think about the quality of service when choosing AMCs?

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