New Product - Mutual Fund based ATM card

Reliance Mutual Fund has introduced the first of its kind "ATM" card linked to Mutual Fund Folios in association with Visa. This is a new concept with regard to Mutual Fund investments and this may ultimately take us closer towards Investment accounts with Cheque book facility.

In this new product, Reliance Mutual Fund would issue ATM card, which you can use like any other bank debit card and it is accepted across 30 million outlets. The ATM card holder should be holding units in Reliance Money Manager Fund or Reliance Liquid Fund - Treasury Plan schemes.

At this stage, we have limited information on this product but we see the following benefits:

1. Flexibility in monetising the mutual fund investments and the ability to carry the value of your liquid investments in an ATM card would be very useful.

2. Possibility to earn higher interest on the liquidity funds as compared to savings bank account. With the recent de-regulation of savings bank interest rates, the difference on yields between savings bank accounts and MF liquid fund investments are reduced.

Clarifications required in the following areas:

1. The modus operandi on the reduction of the units for the usage on the ATM card. What is the expected lead time before the number of units would be reduced?

2. Do they block the equivalent number of units as and when a transaction takes place?

3. Does this service involves any additional charge to MF investors?

These are early days but I think we require new and innovative products like this to liven up the financial services space. We can expect a slew of launches on the same lines from other Mutual Fund players in the coming months, if not in the coming weeks.

Will post more as we are able to lay our hands on additional information.