Online investing platforms like Zerodha and Groww are facing customers ire as refunds for failed mutual fund SIPs stay stuck for two months, after the implementation of new SEBI circular discontinued pooling of funds by stockbrokers for mutual fund transactions.
The SEBI circular, which came into effect from July 1, mandated that investors’ money be transferred directly from their account to the Asset Management Company (AMC) and exchange platforms, without involving the brokers. Earlier, companies like Zerodha, and Groww would pool the investors’ money into one account and buy mutual fund units. This mandate was introduced to safeguard investors and prevent misuse of funds.
Customer experiences
BusinessLine spoke to customers who are awaiting refunds of failed mutual fund allocations initiated through Zerodha’s mutual fund investment product Coin and Groww since July. Sanmesh Kalyanpur, a Mumbai-based Groww customer has been waiting for a refund of almost ₹50,000 since July 2022. “My mutual fund SIP got deducted in July and after two weeks, the allocation was not done. Ideally, the refund should have taken a maximum of 10 days but it has been 2 months now and nothing has happened,” said Kalyanpur, who has been investing through Groww for the past 3 years.
Customers are also losing out on the opportunity cost because of the delay in refunds. “Market has really gone up in the last one and a half months. My portfolio has easily taken up 30-40 per cent, so I am losing out on opportunity cost everyday. Plus, the customer experience has been terrible,” Kalyanpur added.
Another Groww customer from Bengaluru, who spoke to BusinessLine on the condition of anonymity, said a lot of people in his network who invested in mutual funds since July and got rejected are still waiting for their refunds. “People have invested upto ₹10,000. We have not received any refund and there is not even enough clarity in customer service response,” he added. He has been investing through Groww for the past six months.
Similarly, a Coin by Zerodha’s customer from Bengaluru wrote on Twitter, “This is really a bad transition or at least clearing corporation was not ready to handle it. My funds are stuck and still have not received a refund. Fed up coordinating with the bank and Coin.”
Groww’s response
While Zerodha did not respond to BusinessLine queries on the matter, Harsh Jain, co-founder and Chief Operating Officer, Groww said, “From July 1, the payment process for mutual fund SIPs and lump sum purchases has changed. Under the new regulation, platforms and intermediaries do not manage the flow of funds and refunds. Due to the change in process, a few investors across all platforms are facing issues with their SIP payments and refunds. We are working closely with banks, payment aggregators, and the clearing corporation to improve the customer experience and make it seamless, fail-proof, and reliable for investors.”
Also read: Fund Query: Is my MF portfolio well-balanced?