AMC Speak Banaaye rishte aur bhi mazboot D P Singh, ED & CMO, SBI MF

D P Singh takes us through Bandhan SWP – a unique solution launched by SBI MF that helps you provide for the needs of your loved ones in a very tax efficient manner, while retaining full control on the corpus that you set aside for this purpose. Bandhan SWP can be leveraged by investors in multiple ways – it is really upto distributors and advisors to reach out to their clients and help them leverage this solution effectively to give their families a world of confidence they truly deserve.

WF: Congratulations on the launch of Bandhan SWP. In what ways is this different from regular SWPs?

D P Singh: SWP, a facility offered by mutual funds, allows you to withdraw an amount periodically into your own bank account. ‘Bandhan SWP’ is a unique facility offered by SBI MF where you can set a SWP with a direct regular payout in your beneficiary’s (loved ones) bank account – it can be either your child, sibling, spouse or a parent, by just giving one-time instruction.

WF: What would be the typical life situations where Bandhan SWP can be an ideal solution?

D P Singh: Bandhan SWP is a very flexible solution which you can tailor as per your needs. The facility can be used extremely well by middle aged investors and those approaching retirement. A son / daughter can opt for Bandhan SWP for parents who might need an additional and regular cash flow to maintain and enhance current lifestyle comfortably. As an individual approaching retirement, you can choose to start Bandhan SWP from your retirement corpus to create a regular stream of monthly cash flows for your spouse for household expenses or provide for pocket expenses for a child going to college in a different city

WF: What will the tax implications be in the hands of the SWP recipients and SWP investors?

D P Singh: Withdrawals will be subject to tax as per current regulations in place. What is important and I would like to point out is that withdrawals from SWP have been more tax-efficient when planned right and in the current tax regime have become even better. The reason primarily is that taxation in SWP is only on the gains and not the only whole amount hence tax is spread out/deferred over the period of your withdrawal and hence becomes more tax-efficient.

As we know, for debt schemes any withdrawals within 3 years of investment are subject to short-term capital gains which are added to your taxable income and taxed as per the tax slab you fall under. Withdrawals after 3 years are taxed at 20% after indexation. For equity-oriented funds, withdrawals within 1-year are subject to short term capital gains and over 1-year it is proposed to be taxed at 10% for gains over Rs. 1 lakh as per Union Budget 2018.

WF: What additional documentation will be required to avail this facility?

D P Singh:
1. If beneficiary is KRA complaint, acknowledgement copy is required. Else investor should submit relevant verifiable documents evidencing proof of identity and proof of address.
2. Proof of relationship such as Passport, PAN card, Birth Certificate, SSC / Degree certificate, Marriage Certificate, etc., wherein the name of the specified beneficiary family member is mentioned.
3. Cancelled cheque leaf of the Bank account or Copy of Bank Statement/Passbook of the beneficiary family member.
4. The unitholders opting for the facility shall take the prior written consent from the beneficiary family member for sharing the pay-out through SWP and it shall be deemed that the unitholders have obtained such consent. In case of any objection received by us from the beneficiary family member on the SWP mandate being credited to his / her Bank account under the facility, the unitholder will have to produce the written consent from the beneficiary family member within 30 days, failing which the facility shall be discontinued with immediate effect.

WF: You recently stated in our Asset Managers Round Table that solution based selling is the only way to get away from some of the excesses we are seeing in the market in the way hybrids are being positioned. Can you please elaborate, especially in the context of SWPs?

D P Singh: As we move ahead as an industry it becomes imperative for us to move away from product-based selling to goal-based solution offerings as this what the investor is looking for. How can he/she plan for his life’s goals? Pitching an individual scheme or a couple of schemes will not work anymore especially now with SEBI’s standardisation coming into place. What investors will be looking for is solutions offered by fund houses for his financial goals. Be it through SIP based solutions or SWP. SIP have become now the default choice for investors looking to invest in mutual funds but solutions like SWP also need to be popularised as they allow you to withdraw a fixed amount for your needs once you have put in a mandate with the fund house. You choose the amount, duration and the bank account.

WF: What are your plans on promoting Bandhan SWP and how should distributors leverage this proposition?

D P Singh: We have a media campaign planned which will have Outdoor, Print, Radio and online. Also, we have lined up partner outreach programmes in various cities to specifically explain the benefit that Bandhan SWP can give to their clients. We have developed comprehensive kits for Bandhan SWP in regional languages to help drive the campaign in B 15 cities. To explain the concepts better we will use short videos across digital marketing channels and social media.

Distributors can be the champions of Bandhan SWP by providing a solutions oriented investment approach to their clients. This facility has a lot to offer to investors in helping them plan many of their financial goals.

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