With a common account number, you can use the MF Utilities platform to invest in any fund house's scheme.
After this, you’ll be allotted five different folio numbers.
However, if you have a Common Account Number (CAN), you can deposit a single cheque of Rs 50,000 in an escrow account of MF Utilities (MFU), which facilitates CAN, and payments to each of the fund houses can be made from that account.
Similarly, if you want to update details such as nomination, or fill the form for Foreign Account Tax Compliance Act compliance, you only need to do it once using your CAN; you don’t need to it separately for different fund houses.
The CAN is a single reference number issued by MFU.
CAN will hold information such as name, know-your-customer (KYC) status, income details, mode of holding, nomination contact details of the primary holder, multiple bank accounts, depository account details, power of attorney, if any, etc.
CAN enables investors to transact in multiple schemes of various mutual funds participating in the MFU through a single transaction and consolidated payment.
MFU has opened 18,000 CANs so far, says V Ramesh, managing director & CEO. Recently, Tata Mutual Fund made it mandatory for all its employees to open CAN with MFU.
“There is an inertia at the industry level. But we will go through distributors to make CAN popular,” says Ramesh.
The procedure for getting a CAN is simple. Investors must submit a self-attested copy of their PAN and cheque details at the MFU office.
Once it is approved, all folios can be mapped to the CAN. It will act as a single point access for all your mutual fund investments.
At present, to make an investment, investors have to submit the cheque details or application forms to different repositories depending on whom the fund house has tied up with.
With CAN, they can submit the details to any office. Distributors need not carry forms of different fund houses; by using CAN, they can invest in any fund house on behalf of their clients.
However, Suresh Sadagopan, founder Ladder7 Financial Advisories, says CAN is just like another number that investors must remember, such as PAN or Aadhaar numbers. Registering for a CAN will do away with multiple folio numbers, but investors could find it cumbersome.
“For now, we’re advising our investors to go through the distributor route - either agents or online platforms. Or in case of direct plans, do it directly through the fund houses’ websites. Also, there is confusion whether CAN is accepted by all fund houses. If it is not, then investors will have to do KYC all over again,” says Sadagopan.
The benefits of registering for CAN will outweigh the hurdles, points out R Ganesh, CEO and managing director, Tata Asset Management.
“For investors filling up one form online instead of going to multiple fund houses and receiving a consolidated statement across all fund houses will be a blessing.
That is why, we’re encouraging our staff to go through it.”
Aashish Sommaiyaa, CEO of Motilal Oswal AMC, says that going through MFU will offer investors the same benefits as going through any other platform that allows common investment across fund houses.
The only differentiator is that MFU is a neutral industry-wide body, while other platforms could also be distributors.
“For investors, the convenience to invest across fund houses is the key, which other platforms also offer,'' he says.
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