Fearing that potential investors would be driven away because of the requirement of mandatory quoting of PAN, the mutual funds industry has charged it was being discriminated against, especially with relation to other players in the financial sector.

While Permanent Account Number is not mandatory across the financial sector, mutual fund investors must quote their PAN, which the Association of Mutual Funds in India (AMFI), the apex body of the industry, said was a clear case of discrimination.

Deep concern
“The mutual fund industry is deeply concerned about PAN being made mandatory for all investments in mutual fund schemes with immediate effect while such a rule is not binding for investors in market-linked life insurance schemes,” AMFI Chairman A P Kurian told PTI here. The mutual funds industry has also sought an extension of the deadline for compulsory PAN by another year. It recently obtained a relief from Sebi which extended the deadline from July to December 31 this year.

Unwarranted
The extension will also facilitate in attracting investors from rural areas who are presently unaware about PAN and how to obtain it, Mr Kurian said. “We are very unhappy and concerned about PAN being made compulsory for all investments irrespective of the amount involved.”

The MF industry is particularly peeved because a PAN is not mandatory for investments in Unit-Linked Insurance Plans (ULIPs) unless the amount exceeds Rs 50,000. ULIPs are life insurance plans whose returns are linked to stock markets. “Such has been the popularity of ULIPs in the recent past that they have outpaced the growth of regular endowment plans,” an analyst pointed out.

In recent times 80-90 per cent of premium collected by life insurance companies was from ULIPs, the analyst added. “To say that mutual fund investors should have PAN cards and not for people who pay insurance premium for ULIPs is highly discriminatory,” Mr Kurian noted.

Highlighting the fact that all transactions in the MF industry are conducted only through cheques, the AMFI chairman said PAN should be made uniformly applicable across the financial sector and not just for the mutual funds industry.

“We welcome PAN, but introduce it in an uniform manner.” Mr Kurian also apprehended that investments could get diverted away from mutual funds toward ULIPs.