Mutual Fund Operations and RTA Functions
Domain 1: Mutual Fund Operations and RTA Functions
This domain tests the operating chain behind a mutual fund folio: who does what, how a transaction becomes a unit balance, and where the RTA sits between investor, AMC, trustee and custodian.
Core roles and rules
- The AMC runs the scheme; the trustee oversees compliance and investor protection; the custodian safekeeps securities; the fund accountant computes NAV; the RTA maintains the unitholder register and processes service requests.
- An RTA to a mutual fund is a SEBI-registered intermediary. It time-stamps applications, checks completeness and funds realisation, applies the correct NAV, updates the folio, issues statements and reconciles units with the AMC's books.
- Unit reconciliation is a control, not a formality: RTA unit capital must agree with AMC/registrar records and bank realised funds. Dividend, redemption and switch transactions must be processed against the correct record date and NAV.
- The RTA does not set NAV, approve scheme changes or guarantee returns; those sit with the AMC/trustee/valuation process.
Worked example
An investor switches Rs 1,00,000 from Scheme A to Scheme B. The RTA processes the redemption leg from A and the purchase leg in B, applies the relevant exit load and NAVs, updates both folios, and reconciles total units with the AMC's unit-capital report. A one-folio mismatch is traced to a failed cheque realisation; the RTA reverses the provisional units before confirming the switch. Reasoning: the folio update is provisional until funds and unit reconciliation are clean.
Traps
Do not merge AMC and RTA roles; do not assume a transaction is final before funds realisation; do not forget time-stamping, record-date checks and reconciliation; do not treat reconciliation as optional.