The tale of DIRECT broker code

POSTED BY Rajesh K ON February 26, 2013 5:20 pm COMMENTS (8)

I have been an active SIP investor with DSP, HDFC, Birla Sunlife, IDFC and ICICI over the last couple of yrs. This forum has been very useful for the kind of mutual funds that we should be looking at. Thanks to Manish and the team.

I wanted to share some experiences over the last one month. I have the HDFC ISA through which my investments are routed. In the month of Jan this yr when I wanted to renew my SIPs I thought it fit to make DIRECT investments with the AMCs and close the ISA. HDFC Bank said that they cannot close the ISA till the investments are tied to them and they cannot take the change of broker code requests.

I gave the Broker code change requests at CAMS Hyderabad requesting the respective AMCs to change my broker code from the current HDFC Bank to DIRECT (ARN-0000). It has been more than 6 weeks and see what happened along the way.

DSP changed it in less than a week (Superb). I had to call HDFC and Kotak repeatedly after which the broker code was changed to DIRECT. I had to explain them what the request was for since they thought it should be a switch request.

I was stuck with Birla Sun life, ICIC and IDFC since all of them rejected the requests saying that the request was invalid and they cannot change the broker code to DIRECT. This I came to know after repeated calls to the customer service. I then gave the requests again directly at the AMC offices this time instead of CAMS. I confirmed with the executives regarding the requests and a few phone calls from them to their superiors after which the requests were taken telling me these are valid requests and will be executed. It has been close to 10 days now and again repeated calls am being told that this cannot be done.

Infact Birla, IDFC and ICICI went to the extent of telling me that the regular funds cannot exist without a Broker code and hence the request cannot be executed and I will have to switch the funds to the Direct plans…pathetic to the core.

So much of information in the public domain available regarding the DIRECT broker code that many of the AMCs does not even understand…

With this experience I figured out 2 things. Stay with DSP, HDFC AMC since I feel that they atleast understand the nuances of the business or atleast understand the requests given by the customer. Invest directly with AMCs even if it means you have to spend that additional time.

The whole channel partner business is a mess. It seems that the only way out is to redeem…

8 replies on this article “The tale of DIRECT broker code”

  1. Dear Rajesh, as you ‘ll be investing directly & that too in direct plans only to save on ER, the folio no. ‘ll remain same but this ‘ll not be added into your HDFC ISA holding. Because adding in ISA ‘ll invite higher ER which is not possible in this case.

    Thanks

    Ashal

  2. Rajesh K says:

    Dear Ashal, your suggestion was one of the thing that was weighing in my mind as well. Keep it for a yr, redeem completely and close ISA.

    Now that I can do the online transactions directly with AMCs what happens if I transact in the same folio in direct plans? Will this new funds be linked to HDFC since the folio is linked? How does this work…

    Thanks
    Rajesh

  3. Dear Rajesh, although you may go the way dear Ramesh is suggesting. Practical way is to sell all holdings in HDFC ISA mode. In between use your online access to start investing in the respective AMCs’ funds of your choice. Close HDFC ISA account. That’s far easier then what you are trying. Yes there ‘ll be impact of exit loads & taxation on STCGs but this is a price you w’d have to book one time. Another option, stop investing with HDFC ISA at all. Complete your 1Y holding period in all Eq, funds there. Redeem then & close down HDFC ISA.

    Thanks

    Ashal

  4. Rajesh K says:

    While waiting for the broker code change I went ahead and got all online PINs for all AMCs that I had funds in. This is not a problem.

    I have been to the branch thrice over the last couple of weeks. The HDFC branch tells me that the request has to be given at the respective AMCs and the ISA has to be blank before it can be closed. I will probably try again.

    Thanks.

    1. Ramesh says:

      No, you will have to go to your bank branch, and fill up two forms:
      1. First one will be to change the ARN code from HDFC Institutional ARN to HDFC Bank simple ARN. Once that is done, then
      2. Fill the ISA closure account.

      Both the things will be done through the Personal Banker in HDFC Bank branch only. Not in CAMS or individual AMCs. Insist on this.
      I have done this, so I know.

  5. Ramesh says:

    Do one thing.

    1. First get online access with your problematic AMC houses, namely IDFC, ICICI and BSL, using the respective folio numbers. You will be Existing Investor without IPIN. Use that option everywhere.
    2. If you have to go to the respective AMC centres to start that, that is ok. You mostly just need a plain paper application.
    3. Once, your online access is ready in all these, then goto the HDFC bank’s branch, and submit an appropriate Closure of HDFC ISA account form, in which you will have to list all the current holdings in your ISA account. The bank will send a request for converting from HDFC ISA ARN to the normal HDFC Bank ARN (they are different). Also, the ISA account will be closed, so since you already have the online access, there would be no problem for you to manage them.
    4. Understand, HDFC Bank ARN or Direct Code will not make any difference for you, since Direct ARN in normal fund does not get the benefit of lesser expense ratio. Only when you put the money into the -Direct option with the AMC will you get the benefit. For that, you do need to Switch. I hope this is clear with you.
    5. Also, try and consolidate your money in lesser AMCs. DSP and HDFC do give good fund universe for most equity needs.
    6. The entire process may take one or two trips to HDFC Bank branch. But overall, their customer care and bankers are quite decent and helpful. The whole process should take about 1-2 months.

    1. Saurabh says:

      Just to add to this : New Broker Code to be used to convert to HDFC Bank ARN is – ARN 0005, I had to struggle a bit to get that , so that I can mention in ISA closure form, Bank employees didn’t know that too.

      1. Thanks for sharing that Saurabh

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