Addendum No. 38- Risk Mitigation against Third Party Cheques

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Addendum No. 38/2010-11 November 22, 2010

Risk Mitigation process against Third Party Cheques

In accordance with the AMFI Best Practice Guidelines on the Risk Mitigation process
against Third Party cheques in Mutual Fund subscriptions and also to enhance the
compliance with Know Your Customer (KYC) norms under Prevention of Money
Laundering Act, 2002 (PMLA), the following clauses are inserted in the section under
“How to apply” of the Statement of Additional Information (SAI).

A) Restriction on Third Party Payments
With effect from November 15, 2010, third party payments are not accepted in any of
the schemes of UTI Mutual Fund. “Third Party Payments” means the payment made
through instruments issued from an account other than that of the beneficiary
investor mentioned in the application form. However, in case of payments from a joint
bank account, the first named applicant/investor has to be one of the joint holders of
the bank account from which payment is made.
Exceptions:
In the following exceptional situations, applications with Third Party Cheques are
accepted:
a) Payment by Parents/Grand-Parents/related persons on behalf of a minor
in consideration of natural love and affection or as gift for a value not
exceeding Rs.50,000/- (each regular purchase or per SIP installment).
Aforesaid limit of Rs.50,000/- shall not be applicable for making
investment under UTI Children’s Career Plan, provided the donor has
complied with the requirements mentioned hereinunder.
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b) Payment by Employer on behalf of employee under Systematic
Investment Plans through salary deductions.
c) Custodian on behalf of an FII or a client.
However, the following requirements are required to be met in the above
exceptional situations:
• It is mandatory for the Investor and the person making the payment to be
KYC compliant.
• The investor should give details of the bank account from which the
payment is made and the relationship with the beneficiary.
• Further, the payment instrument issued should be from the drawer’s
account only.
Process to identify Third-Party payments:
i. In order to establish the subscription by the investor from his own bank
account, the investor has to necessarily state the bank account details from
where the investment is made/cheque is issued (Pay-in Bank Account) and the
bank account where he wishes to receive the dividend and redemption
payments (Pay-out Bank Account). Pay-out Bank Account details will be used
for verifying Pay-in Bank Account details.
ii. In the situation where the payment instrument does not contain the name of
the first holder and the signatory is other than the first applicant/holder, the
investor is required to submit the copy of bank statement/passbook containing
his/her name in the same Bank account, from which the instrument is issued.
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iii. In case of the subscriptions received with demand draft (DD)/banker’s cheque
(BC), the Investor need to submit any one of the following documents along
with the purchase application.
a) a Certificate from the Issuing banker stating the Account holder’s name
and the Account number which has been debited for issue of the
instrument or
b) counterfoil of the deposit slip containing the name of the
Purchaser/applicant of the DD/BC which should be same as the name of
the 1st unit holder as per the subscription application / folio and seal of
the bank or
c) copy of the Bank passbook showing the debit of the equivalent amount
of DD/BC (inclusive of bank charges, if any) and the narration containing
issue of DD/BC in favour of UTI MF (1st unit holder should be one of the
Bank account holders)
iv. In case of DD/BC obtained by the investor from his own bank by paying cash
upto Rs.50,000/-, the same should be accompanied by a certificate from the
banker giving name, address and Permanent Account Number (PAN) (if
available) of the person who has requested for the DD/BC or counterfoil of the
deposit slip containing the name of the Purchaser/applicant of the DD/BC
which should be same as the name of the 1st unit holder as per the
subscription application / folio and seal of the bank. The investor is required to
ensure that the name as per the letter matches with the first named unit
holder/applicant. Such DD/BC issued by the Bank against Cash will not be
accepted for investments of Rs.50,000/- or more.
v. In the case of consolidated DD obtained by the Business Development
Associates (BDAs) / Chief Representatives (CRs), the BDA/CR will ensure that
the 1st holder in the Folio/application form is one of the account holder in the
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bank account from where the cheque is issued or the same bank account is
one of the registered bank account under the Folio.
vi. In case of subscriptions received by way of Real Time Gross Settlement
(RTGS), bank transfer, etc., a copy of the instruction to the bank stating the
account number debited must accompany the purchase application. The
Official Point of Acceptance (OPA)/ Registrar & Transfer Agent (RTA) shall
check that the account number mentioned on the transfer Instruction copy is a
registered pay-in account or belonging to the first unit holder/applicant.
vii. In case of aggregated payments received through Channel distributors, RTA
shall ensure that the investment amount received is from one of the registered
bank accounts.
viii. Further, for payments through invest@uti, investors will ensure and declare
that the investment is being made from one of his/her registered bank
accounts.
In case, the application for subscription does not comply with the above provisions,
UTI AMC retains the sole and absolute discretion to reject/not process such
application and refund the subscription amount and shall not be liable for any such
rejection.
B) Registration of multiple bank accounts:
In order to facilitate the implementation of risk mitigation process as above, investors
can register the multiple bank accounts with the Mutual Funds. In this connection, the
following may be noted:
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1. The individual/HUF investors can register upto 5 bank accounts and nonindividual
holders upto 10 bank accounts under the Folio.
2. The investor need to submit any one of the following documents in support of
the bank account details:
• Cancelled cheque leaf or
• Bank statement or
• Bank pass book containing account number, account holders’ name and
address.
In case if the copy of the above document is submitted, the investor should
bring the original for verification.
3. The registrations will be carried out after verifying that the first named holder
in the Mutual Fund folio is one of the bank account holders.
4. The investor has to state one of the bank account as default account for
receiving divided and redemption payment.
5. In case of existing investors, till they register multiple bank accounts and
register different bank account as default bank account, the existing bank
account will be treated as default bank account.
6. Investors will not be allowed to delete a default bank account unless investor
registers another registered account as a default account.
7. Investor is required to submit proof of the existing registered bank accounts in
the folio/account, prior to registering additional bank accounts or deleting bank
accounts.
8. On receipt of above together with the required valid documents, there will be
cooling period of not more than 10 calender days within which validation and
registration of bank account will be carried out by RTA. During this period the
investor will be informed through letter/email/SMS/phone etc. about the
registration of new bank account.
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9. Investors may register the bank accounts well in advance and do not club the
change in bank account together with the redemption request.
C) Mode of writing cheques:
In order to avoid frauds and as a best practice, investors are advised to make
the payment instrument (cheque, demand draft, pay order, etc) favouring “UTI
Mutual Fund Scheme A/c First Investor name” or “UTI Mutual Fund Scheme
A/c Permanent Account Number” or “UTI Mutual Fund Scheme A/c Folio
number”.
The above is applicable from 15th November 2010. The existing SIP
accepted/registered prior to 15th November 2010, will continue as per the existing
procedure.
This addendum is an integral part of the SAI and Key Information Memorandum
(KIM) of the schemes and should be read in conjunction with SAI/KIM.
For UTI Asset Management Company Limited
Sd/-
Authorised Signatory
In case you require any further information, please contact the nearest UTI Financial Centre.