Several customers of online brokerage platform Groww got a rude shock, finding their investments in liquid schemes redeemed without their authorisation and re-invested in a New Fund Offer.
Kanika Gupta, one such affected investor, said that her entire investment in ICICI Prudential Mutual Ultra Short Debt Fund Direct was switched to a new ICICI Flexi Cap fund without her knowledge on July 12. Incidentally, the NFO of ICICI Flexi Cap closed the same day.
‘No proof from MF’
“They (ICICI MF) are constantly blaming my broker app Groww, saying they received the order through them, but till date they have not provided me any proof to confirm their claim,” she said.
“Though ICICI MF has assured that they will switch back the investment to my original fund without any loss or exit load, there was no entry in Groww account to authenticate the transfer,” Gupta said in a social media post.
Another investor Ritik Singh, too, faced a similar issue on July 12. When contacted, Groww told BusinessLine, “More than 12,000 Groww investors had invested in an NFO. Out of this, around 100 customers were switched to this NFO from debt funds due to a combo feature introduced for this NFO by the AMC. A similar situation was faced by customers on other platforms as well. No customer was impacted because of this. All these cases were reversed the moment Groww and the AMC got to know about this issue.”
In a statement, ICICI Prudential said: “Basis instructions received from a few Registered Investment Advisors and transactions for a few customers were processed in the normal course of business. Upon information gathered about a probable operational issue on the platform used by the select RIAs, we immediately reversed these transactions.. without any loss to the customers.”
No role: BSE
The BSE said the mutual fund concerned has reversed the transactions after discussions with the distributor. “Exchange provides a mechanism to transmit orders and has no other role in such transactions,” said BSE STAR MF. Sources at SEBI said the market regulator is already examining several complaints against online discount brokers. “But in this latest incident, it is not clear if the affected investors have filed a complaint with SEBI. If this person has filed a complaint, SEBI will look into it,” the source said.
This development comes even as many retail investors have been booking profit on their direct investments in equity markets and moving the funds to mutual funds, particularly with NFOs flooding the market. Indeed, ICICI Flexi Cap made a record collection of ₹10,000 crore thanks to investors rushing in to take advantage of the bull run in equity markets. Online platforms such as Groww have helped widen the reach of mutual funds with zero brokerage plans. Fund houses have mopped up ₹7,540 crore through the launch of 25 NFOs in the June quarter alone against just ₹429 crore via nine NFOs in the same period last year.
‘Thorough probe needed’
“Though it may be one of the issues, such events should be probed thoroughly and ensured that they did not happen intentionally. Otherwise, investors confidence will be shaken, particularly when small investors are being roped into mutual fund with systematic investment plans of low as ₹500 a month,” said Ramesh Pawar, an independent mutual fund distributor.