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Have you started investing in mutual fund? If you haven’t already, you should. If you are wondering why should you invest in mutual funds, check out our privious article: 9 expert backed things to know before investing in mutual funds.
Let’s say you have started investing in mutual funds through apps like Groww, Kevera, Zerodha coin or any other app. But imagine you wake up one day and findout that your mutual fund investing app is not working or it will stop working in some days. What will you do? Will you lose your money if your mutual fund app closes? short ans is no. Let’s find out what will happen.
1. Understanding Mutual Fund App
Mutual Fund apps are nothing but a platform from where you can buy mutual funds and monitor them and sell them whenever you want. There are other ways to buy mutual fund but using these apps are very convenient. Mutual Fund apps are SEBI registered broker or investment advisor. These apps act as intemediaries between you and the mutual fund house. This is how they work:
API Integration & Process Data
Fund houses provide APIs, which are used by mutual fund apps to fetch real-time information (e.g. NAV, performance etc) about the mutual funds. Mutual funds apps then extracts the required data from the APIs and processes it and present it to the user in an understandable manner.
Transaction Process
When you place an mutual fund order, the app sends the request to the fund house’s system. The fund house processes your order and money deducted from your bank goes directly to fund house’s account.
Mutual fund apps follow SEBI’s regulatory guidelines to protect investors.
2. Scenarios of App Closure
Mutual funds apps may stop working for various reasons. These can be because of temporary technical issues or permanent app closure.
- Techical issues can cause because of software maintenance, server outage or any other problem. These issues are usually temporary.
- Permanent app closure can happen due to company bankruptcy, regulatory actions by SEBI or app is aquired by another company.
3. What happens if your mutual fund app closes?
Don’t panic if your mutual fund app closes. As we said earlier, your mutual funds are not stored in the mutual fund apps, it is stored in the asset management company (AMC) or in your demat account. Your mutual fund app just act as a display to view your investments.
4.Steps to take if your mutual fund app closes
If your mutual fund app stops working, follow these steps to ensure you maintain access to your investments:
Log in to the AMC’s Website:
You can track and manage your funds through your AMC’s website. You need to have 3 things- Your folio number, Your pan number and registered email id.
Use CAMS website to access mutual funds
You can access your mutual funds through CAMS website. CAMS is a mutual fund transfer agency. It provides service to mutual fund companies and also investors. You can view your mutual fund statements, start a new mutual fund and also redeem your existing mutual funds.
Explore alternative apps
If you want you can link your investments to a new mutual fund app. You just need to give necessary details to transfer your mutual funds into the new app.
Check Demat account
Sometimes mutual funds are stored in demat account. If your mutual funds were bought through demat account your mutual funds will be in your NSDL or CDSL demat account.
5. Regulatory protections in India
Securities and exchange Board of India (SEBI) Act was passed in 1992. The objectives of SEBI are – to protect the interest of investors in securities and to promote the development of and to regulate the securities market.
SEBI formulates policies and regulates the mutual funds to protect the interest of the investors. SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to enter the capital market. The regulations were fully revised in 1996 and have been amended thereafter from time to time. SEBI has also issued guidelines to the mutual funds from time to time to protect the interests of investors.
All mutual funds whether promoted by public sector or private sector entities including those promoted by foreign entities are governed by the same set of Regulations.
6. Red Flags to watch for
We know the saying “It’s better to be safe than sorry”. So before anything happens keep an eye on these things:
- Frequent technical issue- These could be events like unscheduled downtimes, failed transactions without clear reasons, missing transaction records etc.
- Poor customer service can be another red flag. These include things like unresolved queries, vague explanations.
- Pay attention to the news related to SEBI, RBI or Finance ministry as these regulatory agencies’ main objective is to safe guarding regular investors. These agencies may release news about their concern about certain apps.
- You can also read reviews online to know about people’s experiences. Watch youtube videos, read review of mobile app in playstore, read quora and reddit reviews.
7. Conclusion
While mutual fund apps have revolutionized the way Indians invest, they are not immune to closure or operational issues. By understanding how mutual funds apps work, knowing what to do if an app closes, and safeguarding your investments, you can ensure peace of mind. Always stay informed, maintain proper records, and explore alternative ways to manage your portfolio.
Before diving into mutual fund investments, make sure you’re well-prepared. Check out my last article on “9 Expert-Backed Things to Know Before Investing in Mutual Funds,” which provides important insights to help you make informed decisions.
FAQ
- What happens to my mutual funds if the Groww app is closed?
- If Groww app is closed you can still access your mutual funds from your mutual fund’s amc website and CAMS website as we have talked earlier in the article. Groww and other similar type of apps don’t hold mutual funds or shares. They just show all your mutual funds in the same place.
- What will happen to mutual funds if Zerodha closes?
- Even if Zerodha closes all your mutual funds that are stored in the demat account can be accessable because zerodha doesn’t store your mutual funds or stocks. Log on to a different brokers website and access your demat account. or you can access your demat account through CDSL or NSDL website( which ever type of demat account you have).
- Is my money safe in mutual funds?
- Yes. Mutual funds are heavy regulated and closely monitored by SEBI. So, your money in mutual fund is safe but the value of your mutual fund can increase or decrease depending upon the market condition.
- Can I transfer mutual fund from one broker to another?
- Yes. You can transfer mutual fund from one broker to another.