In case any mutual fund brokers such as Groww shuts down, your account will still be active with the corresponding mutual fund house. This way, you can directly reach out the mutual fund house and enquire about the current status of your account and investments with them.

What is Groww?

Groww is a new-age investment platform for Millennials. Started as a direct mutual fund platform, Groww is one of India’s fastest-growing investment platform that aims to be an all-in-one platform to diversify investor portfolio across multiple asset classes. Groww is an online discount broker that currently offers stocks, mutual funds, digital gold, and very soon looks to launch US Stocks and Fixed Deposits.

Stocks And Shares

Your funds are in a Demat (short for ‘dematerialized’) account, which allows you to hold stocks and other securities in digital form. These demat accounts actually reside at depositories, both the SEBI-approved: the Central Depository Services (India) Limited (CDSL) and the National Securities Depository Limited (NSDL), which was created by the Indian Government’s Ministry of Finance (MoF). At no point are your stocks and shares with the brokerage or the individual broker. They function just as a platform, like the intermediary mentioned above. All they can do is trade as per your instructions using the funds in your trading account.

What Do I Do If My Broker Has Shut Shop?

First and foremost, your shares or any other securities are safe in electronic form at the NSDL or CDSL or the respective AMC. You must focus on your trading account, i.e., the account that contains the money your broker uses to buy and sell on your behalf. If any such unfortunate event were to occur, you need to apply to the Investor Protection Fund (IPF), set up by SEBI, to provide compensation. You need to file a claim for compensation within three years per SEBI rules to become eligible for such payment.

Key Takeaways

  • All stocks and shares are safe in electronic form at their depositories. The broker cannot touch them.
  • Stocks and shares reside in electronic form at the Central Depository Services (India) Limited (CDSL) and the National Securities Depository Limited (NSDL).
  • Mutual fund units reside at asset management companies (AMCs).
  • Brokers are intermediaries; they cannot operate your trading account without your consent. In addition, they cannot use funds from your account for their purposes.
  • If a broker shuts down, you need to apply for compensation for your trading account with the Investor Protection Fund set up by SEBI.

Groww Cons (Disadvantages)

The following are the cons of Groww. Check the list of Groww drawbacks.

  • Limited investment products with no option to trade in commodity, and currency segment.
  • No Call and Trade services.
  • Do not provide stock tips, research reports, or recommendations.
  • Do not offer to invest in SME shares (Companies listed on BSE SME and NSE Emerge platform).
  • No branch support.
  • No Margin trading facility.
  • No Margin against shares.
  • Advanced order types like BO, CO, AMO, and GTT not available.
  • Trailling stop loss orders are not available in Groww app.
  • Do not offer NRI Trading.
  • SME IPOs are not available.

Is Groww app safe for mutual funds?

Yes, the Groww app is safe and secure for mutual fund investments. Groww is a registered SEBI broker and, an AMFI registered mutual fund distributor. Hence all its transactions are constantly monitored and reviewed by SEBI, ruling out any foul play. Moreover, the Groww mutual fund transactions are done via BSE, thus making monetary transactions completely safe.

Are my shares safe with Groww?

Groww is a SEBI registered investment advisor and a member of the Bombay Stock Exchange (BSE), National Stock Exchange (NSE), and MCX Stock Exchange (MCX-SX). As per the regulations, all securities purchased by Groww on behalf of its customers are held in a dematerialized form with the National Securities Depository Limited (NSDL) or Central Depository Services Limited (CDSL), which are the two depositories in India. The shares held in a dematerialized form are safe as they cannot be stolen, damaged or misplaced like physical shares. Moreover, Groww’s depository participant (DP) provides a secure and efficient way to hold shares and provides investors with the ability to track their holdings. Additionally, Groww uses bank-level security and encryption to ensure the safety of customers’ personal and financial information. It is always recommended to keep strong passwords, enable two-factor authentication, and keep your account details secure to further ensure the safety of your shares and investments.