How to Generate Folio Number

After successful payment, investors receive confirmation that mutual fund units are allotted. This confirmation is sent through an email from the Asset Management Company (AMC), which includes a folio number. However, there are certain cases when you receive the folio number without paying. This highlights a discrepancy in the transaction process, which usually happens due to a technical issue or delay in payment.

Be aware that in most cases, units are allotted only after successful payment. Hence, this situation can cause confusion, and to some, it may even amuse them as they have received mutual fund units without completing the financial transaction. Please note that such units are deemed provisional and are cancelled after 7 days.

For more clarity, let’s study what a folio number is and re-check the various events that made you receive a folio number without paying. Then, we will see what ultimately happens to these provisional or temporary units.
 

Key takeaways

• A folio number is a unique identification number given by the AMC after successful payment.
• Sometimes, due to technical issues, you receive units and the folio number without paying.
• Such units are considered temporary or provisional and will be cancelled within 7 days if no payment is made.
• In such cases, no action is required from your end as the system will automatically reverse both the units and the folio number.

A folio number is a unique identification number. It is assigned to an investor by an AMC when they invest in mutual funds. Mostly, a folio number acts as an account number and allows investors to manage and consolidate all their mutual fund investments with that same AMC under one reference.

Moreover, a folio number helps in easy record-keeping by providing access to investment details like:

• Units held
• Transactions made
• Dividends received

If you have received a folio number without paying, you likely faced the following events:

• You created orders, but payment was unsuccessful: You visited the website and added mutual fund units to your cart (or made some investment selections) but didn’t complete the payment. Now, even though no money was transferred, the system still captured your intent to make the purchase.
• Order creation was successful: Despite not paying, the platform registered your investment orders. This means the “order system” recognised your selections and logged them. However, the system did not process them financially since no payment was made.
• Order recorded with folio and units: Although payment was not completed, the system went ahead and recorded your transaction in the payment gateway. As a result, you were assigned a folio number and even received a temporary allotment of units.

When you receive a folio number and mutual fund units without completing the payment, the units are considered “provisional”. It must be noted that these temporary units were allotted to you because the system recorded your transaction even though payment was not made.

Now, in such cases, if the payment is not completed within 7 working days:

• These provisional units will be automatically cancelled
  and
• The folio number will be deactivated

When this happens, your investment will not be processed and no units will remain in your account. Furthermore, if you do not want to receive these “temporary units”, no action is required from your end. The system itself will reverse the transaction and nullify both the folio number and the units.

In some cases of getting a folio number without paying, you even receive an email from the AMC confirming your mutual fund transaction. Please note that this happens because the AMC automatically sends confirmation emails when transactions are registered. While sending an email, they do not verify whether the payment has been completed.

As mentioned above, since the payment was not made, the units allotted to you are only temporary. If payment is not received, these provisional units will be nullified or cancelled within 7 working days.

Importantly, you will not be charged or held accountable for the units, and everything will be automatically reversed.

Generally, a folio number is generated within 3 working days after your payment and transaction are processed. Once the AMC verifies your details and confirms your payment, they create this number and allocate the mutual fund units to your account. The 3-day period is usually the time required for:

• Transaction processing
• Verification
• Final confirmation of your investment