NISM Series II-B (RTA Mutual Fund) flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

NAV

Net Asset Value per unit equals total assets minus total liabilities of the scheme, divided by the number of units outstanding, computed at the close of every business day.

OPAT

Official Point of Acceptance is the designated office where mutual fund applications are time-stamped; the cut-off time at OPAT determines the applicable NAV for the transaction.

Cut-off time

The 3:00 p.m. deadline on a business day at the OPAT; applications received after cut-off are processed at the NAV of the next business day.

Unit allotment

The process by which the RTA credits units to a unitholder's folio after funds are realised and reconciled; allotment precedes the issue of a transaction confirmation.

Common Account Statement

A consolidated statement issued by the RTA on behalf of the AMC at least annually, covering all folios across AMCs serviced by that RTA, sent by email or post.

Unclaimed amounts

Dividends and redemption proceeds unclaimed for 90 days move to the AMC's unclaimed account; amounts unclaimed for three years are transferred to the IEPF.

Folio

A unique account number maintained by the RTA for a unitholder under an AMC; one folio can hold units across multiple schemes of the same AMC.

Reconciliation

The daily matching by the RTA of units issued and bank balances received against the AMC's records, with variances investigated and reported to the AMC.

₹2 lakh rule

For purchases of ₹2 lakh or more, including switch-ins, the NAV of the day funds are credited to the AMC's account applies, not the application date.

Switch transaction

A redemption from one scheme and a simultaneous purchase into another scheme of the same AMC; both legs may attract different NAVs and exit loads.

Exit load

A percentage charge deducted from redemption proceeds, credited to the scheme's pool, and not retained by the AMC; it is disclosed in the scheme information document.

SIP

A Systematic Investment Plan debits a fixed amount at registered intervals; if the registered date is a non-business day, the next business day is used.

SWP

A Systematic Withdrawal Plan redeems a fixed amount or units at registered intervals from a folio, with the applicable NAV determined on the processing date.

Redemption payout

Redemption proceeds must be dispatched within three working days of the request, or ten working days where the scheme holds unlisted or illiquid securities.

Partial redemption

A redemption of part of the units held; the folio remains open with the remaining units, and the exit load applies only to the redeemed portion.

KYC

Know Your Customer verification is mandatory for all unitholders; PAN is the primary identifier and status must be validated against the KRA before allotment.

CKYC

Central KYC Registry maintains a single KYC record per investor, allowing RTAs to verify identity and address without collecting documents afresh.

Minor folio

A folio opened in a minor's name with a guardian as authorised signatory; on attaining majority the minor completes fresh KYC and a new bank mandate.

Nomination

An optional facility in individual folios naming a person to receive units on the unitholder's death; without a nominee, units pass to legal heirs.

Transmission

The process of transferring units to legal heirs or a nominee on the death of a unitholder, requiring a death certificate, claimant KYC and succession documents.

Change of bank mandate

A written request with supporting proof and the authorised signatory's signature, verified by the RTA against the recorded signature, to update payout bank details.

SCORES

SEBI's online complaints redressal system where investors escalate unresolved grievances; the RTA or AMC must respond within the prescribed action-taken timeline.

RTA registration

Registrars to an Issue and Share Transfer Agents are registered with SEBI under the 1993 regulations and must meet net worth and code of conduct requirements.

AMC net worth

A mutual fund's asset management company must maintain minimum net worth of ₹50 crore, with the sponsor contributing at least 40% of that net worth.

Trustee independence

At least two-thirds of the trustees must be independent of the AMC; trustees oversee AMC operations and safeguard unitholder interests under the 1996 regulations.

PMLA obligations

Anti-money laundering rules require RTAs to maintain records, verify identity and report suspicious transactions to the Financial Intelligence Unit-India.

Record retention

RTAs must preserve records and documents for the period prescribed by SEBI, currently at least eight years, and produce them to SEBI on demand.

NAV error policy

Errors above the prescribed threshold, 0.5% for equity and 0.1% for debt schemes, require repricing, notification and compensation to affected unitholders.

Segregation of duties

Transaction processing, cash reconciliation and NAV verification are assigned to different personnel to reduce fraud and error risk in RTA operations.

Business continuity plan

A documented plan with an alternate site, periodic testing and recovery-time objectives that enables the RTA to resume critical operations after disruption.

Complaint escalation

Complaints are logged, acknowledged within three working days and resolved within prescribed timelines; unresolved cases escalate to SEBI's SCORES platform.

Internal audit

Periodic independent audits of RTA operations, KYC records and payout processes, with findings reported to the AMC and its trustees for action.