How to update bank details in an existing folio?

Stock market or equities  and mutual funds investment have become a very common and favored investment option for the majority of investors. The mode of investment is also quite simple and can be done easily through online mode by directly contacting the fund house or the registered broker. One of the many requirements for starting such investments is a valid bank account. Given below are the details related to updating the bank details in an existing folio.

What is the need for a valid bank account for mutual fund investment?

As mentioned above, mutual funds or individual stocks can be bought easily through online or offline mode. Investors will have to apply for the purchase of the required units of a fund or a stock as the case may be. A mandatory requirement while applying through online or offline mode is a valid bank account of the investor. 

Without providing the correct bank account details, the purchase or sale of mutual fund units or stocks is not possible. In the case of multiple applicants, the bank account of the primary applicant is required to be updated with the investment request. SEBI allows a maximum of 5 valid bank accounts to be attached with a single folio.

When does a person need to change or update a bank account in an existing folio?

The Indian Banking system has been revamped to change the existing account numbers to 15 – 16 digit account numbers. Furthermore, every bank has a unique IFS code (Indian Financial System Code) which represents the bank and the branch code. Therefore any change or update in the bank account number or the IFSC of the bank on account of a merger or acquisition of the bank has to be updated in the existing folio of the investor.

 This will help them receive the funds on account of redemption or purchase new units easily without any hassles. 

Another occasion for a change in the bank account of the investor can be when they move to another city and change their bank or shift their account to another branch of the same bank. This will lead to a change in the bank account number and the IFSC code of the bank.

The investor in each of such cases will have to change or update their bank account details in their existing folio by providing the same in the prescribed form as per the requirement of the fund house. This application for change of bank details has to be supported by the required documentation as per the fund’s or broker’s guidelines for validating the request. 

What are the steps for changing or updating a bank account in the existing folio?

The change in bank account details in an existing folio is required in case the investor has to update the folio with the revised bank details or in case the existing bank details provided have any error. 

The steps for changing or updating the bank account details in the existing folio are provided below.

1. Download the form for change or update of bank account details from the website of the AMC.
2. Provide the necessary details like the folio number, name of the investor, PAN number, date of birth, etc.
3. The investor will also have to provide the existing bank account details with the AMC and the revised or updated details of the new bank account.
4. This form has to be duly signed and submitted by the investor along with the requisite documents.

What are the documents needed while updating the bank account details in an existing folio?

SEBI has also mentioned a list of documents that have to be provided by the investor along with the prescribed for changing or updating the bank details. These documents include the following,

1. The investor will also have to provide a cancelled cheque of both the existing bank account (in case of change from one bank account to another) and the new or correct bank account.
2. Another important requirement is providing a self-attested copy of any government-issued document (Aadhar Card/ Passport/ Driving License, etc.) as identity proof.
3. Letter from the bank that certifies the bank details of the investor. This letter has to be duly signed by the branch manager or any other authorized personnel of the bank.

Conclusion

While investing or redeeming any mutual fund units or any individual stocks, the key elements are the name of the fund/stock and the number of units of the investment along with the bank account details of the investor. Having the correct and updated bank account details with the existing folio ensures that the investment process is smooth and there are no errors or discrepancies in the credit of the redemption proceeds or the investment records of the investor.

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