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The scam that wasn't? Groww issues 6-point clarification on failed mutual fund investment

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Amid reported incidents of fraud related to mutual fund investments made through Groww platform, the company has issued clarifications regarding the same.

Groww posted on X saying, “The scam that wasn’t – debunking misinformation regarding your investment platform.”

The first case it listed was – A Groww customer invested money with Groww, which Groww failed to invest.

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The clarification given was – “This is untrue. A Groww customer had a running SIP on Groww linked to the exchange as a biller. The way these SIPs work is money goes directly from the customer’s bank account to the exchange. One particular installment of this SIP of Rs. 10,000/- was also processed on September 25, 2020. The order ID for this transaction was 1XXXXXXX6.”

“On June 27, 2022, in the RTA feed files that we consume, we received a record for some other transaction not linked to said customer but with the same Order ID. When we processed this file, the customer’s original instalment, dated September 25, 2020, got inadvertently updated to a value of Rs. 50,000/-. This resulted in an increased invested value and units shown to the customer in her portfolio on the app, which was corrected later. This additional amount was neither debited to the customer and nor did Groww fail to invest it.”

The next misinformation case was – Groww had kept the customer’s money with themselves and did not forward the money to the mutual fund company.

The investment platform stated that Groww is a Mutual Fund Platform enabling investment in direct plans and does not earn any commissions. “We operate under the ambit of SEBI and all mutual funds transactions are processed as per SEBI’s & Exchange guidelines. Any payment that comes from the customers goes straightaway to ICCL, which is the clearing house of BSE, and not to Groww. This “non-pool” process began in 2022.”

It also mentioned, specific to the customer query, back in 2020, their SIP was linked to the exchange as a biller, where the money went directly from the bank of the customer to the exchange. In this instance, the amount that the customer was claiming was not received by BSE, which is what has been confirmed by BSE to us and has been captured in our RCA as well: https://groww.in/pages/rca-issue-reported”.

Users also thought that Groww created a fake folio for the customer and later deleted it.

To which Groww replied: “The customer was seeing a different entry which was folio details of another transaction. This folio did not belong to that customer. There was no debit from the customer’s account. When the issue was flagged to us, we reconciled the entry, found the issue with the duplicate Order ID handling and revised the customer’s folio.

Groww does not create any folio numbers, all folios are created by the fund house/RTAs when an investment is made and the Groww app aggregates this information to show customers their portfolio.

Also Read | Tata Equity P/E Fund turned Rs 10,000 monthly SIP into Rs 1.82 crore in 20 years

Groww shared that every order goes through multiple stages and shared the process which is mentioned below

• First, the money moves from the bank via a payment aggregator to the exchange clearing houses and then to the RTAs for processing of the order.

• Then the RTAs create / update the customers folio, allot the units as per NAV and this confirmation flows back via reports that are shared by both the exchanges and RTAs with us.

• Any delay or issues in the above steps can cause discrepancies in customers’ portfolios.

• However in all of this, one thing that is always secure is the customers’ money and the units. While reports can be delayed or incorrect, the money and units will always be safe.

The other misinformation users had was that Groww makes money from delaying Mutual Fund orders, that’s why there are so many issues. To which the investment platform replied that Groww is not involved in the payment process for investments. Money moves directly from our MF customers’ bank accounts to the exchange’s clearing houses, who then pass it on to the fund house. Since Groww does not hold any money in this entire process, we have nothing to gain from delaying orders.

One of the users who had an issue with his transaction said on social media: “The Resolution has happened and we have gotten our Refund/fund money back with the correct value so that’s a good thing on the Groww team’s part.”

After the user shared this, other users who had similar misinformation said that Groww refunded the amount because Groww was liable.

Addressing this misinformation, Groww clarified that even though no money was debited from the customer’s account, the amount was sent to the customer only to allay any fears that the customer had.

Groww also mentioned, “Due to the above misinformations, many customers are trying to validate their Groww portfolio on CAMS and Kfintech and some of them are not able to see all their investment because there are different RTAs for different funds. To verify all their mutual fund investments, customers should verify their holdings BOTH with CAMS and KFintech or can either check MFCentral or get a consolidated account statement for both RTAs. We have also made a short video on how customers can do this on the Groww YouTube channel.”

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