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PAN May Exit From MF SIPs

Investors may no longer have to prove that their money is well-accounted for

Good news for all mutual fund (MF) investors. In what could well be a move to democratize MF investments, investors would not have to worry about furnishing their Permanent Account Number (PAN) for investments in Systematic Investment Plans (SIPs) from now on, according to A.P. Kurian, Chairman, Association of Mutual Funds in India (AMFI).

In a bold step, investors would be exempt from producing their PAN for SIPs up to Rs 50,000 in what many believe would provide room at the bottom of the pyramid to invest meaningfully without having to prove their bona fides.

AMFI says that, though official notification in this matter is awaited from the government, the proposal has already been approved. Hailing the move, experts said that a very large section of the country’s population cannot invest in the mainstream financial markets due to lack of PAN and this move would allow them to do so.

According to estimates, the industry is expected to record 150 million folios by 2015 from 48 million. This comes after the sector already added 10 million folios a year between 2005 and 2008. However, the number declined to a mere 3 million in 2008-09 as a result of the financial meltdown.

All this comes at a time when surveys have shown a marked improvement in investments in MFs. Nearly 7.7 per cent of the gross household financial savings in the 2008 financial year comprised of mutual funds which registered a significant increase from 1.2 per cent from the financial year 2004, according to a CII-KPMG report on the MF industry.