Many investors who have invested in AMCs serviced by Karvy Fintech ( RTA) are writing to us, apprehensive about how the ban by SEBI on Karvy Stockbroking will impact their mutual fund investments. In this regard, we have come up with a comprehensive piece covering the important developments on the issue as well as what should you do as a mutual fund investor. Read On!


On November 22, Securities and Exchange Board Of India ( SEBI), which regulates the functioning of capital markets in India, banned Karvy Stock Broking from accepting new investors , owing to the misuse of clients’ securities. This misappropriation amounts to Rs 2000 crores – one of the largest amounts by a broker in India. Karvy Stock Broking committed fraud by pledging the Demat shares of some of their clients, without their permission, and raised funds for their own purposes, which were then transferred to Karvy Realty Pvt Ltd- one of its sister firms.

Impact On Mutual Fund  Investors 

Like any news pertaining to frauds and defaults, this certainly left a lot of investors perplexed. Many mutual fund investors who invested in AMCs serviced by Karvy Fintech ( RTA) got apprehensive about the state of the investments and voiced their concerns over social media. If you are someone who has done the same, there is no reason to worry and your mutual fund investments are safe. Here’s why. 

Karvy Fintech RTA Operates As A Separate Entity 

While you may panic seeing just the word “ Karvy”, it’s important to note that Karvy Fintech RTA now operates as a different entity with completely different management and ownership structure, i.e Karvy Fintech ( RTA) is independent of Karvy Broking.  arvy Fintech ( RTA) is majorly owned by General Atlantic Singapore Fund Pte .Ltd. 

The Karvy Fintech Pvt Ltd and the Karvy Group Of Companies do not share common directors either; it is managed by an independent board chaired by Mr M.V Nair with Mr. V Ganesh presiding over as  Managing Director & CEO of KFPL. Consequently, any developments affecting Karvy Stock Broking have no impact on the day to day functioning of Karvy Fintech. 

Secondly, Registrars and Transfer Agents ( RTAs) do not handle the money of mutual fund investors. So all investments are received in the scheme accounts and payouts are done from scheme accounts directly. As mutual funds are structured like the way a trust is, your investments will be handled by SEBI registered custodians. A mutual fund custodian is a bank, a financial institution or a trust whose role is to safeguard securities the mutual fund owns. 

Karvy Fintech ( RTA) is not a custodian; their main job is to maintain records of investor KYC, keep track of purchases and redemptions and decrease the operational cost of mutual fund houses. They also offer investors and distributors consolidated account statements of mutual fund investments. In short, they are just intermediaries helping with investment operations. This is different from Karvy Stock Broking that handles money and securities for clients registered with them. Needless to say, as a mutual fund investor, this development has no impact on your investments. 

Is My Data Safe? 

In line with the data security framework provided by SEBI, KFPL has strong policies and procedures in place to safeguard investor data. The operations at KFPL are subjected to stringent scrutiny by means of regular internal audits, ISO 27001 systems audit, Cyber resilience and security audits,  audits by the Big four firms amongst others. KFPL is also compliant with QRTA ( Qualified Registrars and Transfer Agents) guidelines of SEBI. Measures to ensure there is no data compromise are taken seriously at KFPL and hence your information is secure. 

Should I Redeem My Investments? 

As mentioned earlier, RTAs function only as operational intermediaries and don’t handle your investments directly. Needless to say this has no bearing on your mutual fund investments. Investors should remain invested in their mutual funds as per their financial plan and should not panic and redeem in haste as it may hamper your wealth creation prospects. If you want to track the state of your external investments, you can do so easily on Groww 

Read More : How To Track Your External Investments On Groww 

Hope this information was able to solve your doubts about the state of your investments. The operations at Karvy Fintech remain unaffected about the recent developments as it operates as an independent entity. Should you have any queries, you can chat with us and our team would be glad to assist you at the earliest. 

Read More : How To Reach Groww Help And Support 

Happy Investing!