Investor Transactions
Domain 2: Investor Transactions
This domain tests the transaction lifecycle: purchase, redemption, switch, SIP, STP, SWP, dividend payout/reinvestment, nomination and transmission, with emphasis on cut-off, NAV applicability, load and payout timelines.
Core rules and concepts
- Cut-off for purchase and redemption is normally 3:00 p.m. For liquid and overnight schemes, purchase cut-off is earlier (1:30 p.m.), while redemption remains 3:00 p.m. An application received after cut-off is treated as received on the next business day.
- Time-stamping at the RTA/collection point is evidence of receipt. For purchases, NAV applies only when the application is complete and funds are realised/credited as required; a cheque does not automatically earn the application-day NAV.
- Redemption proceeds are payable within 10 working days of a valid request. Switch is redemption from one scheme and purchase into another, so both legs and exit load matter.
- SIP is a standing instruction; STP moves amounts between schemes; SWP withdraws periodic amounts. Dividend payout reduces NAV on the ex-date; reinvestment issues additional units at the ex-date NAV.
Worked example
A SIP instalment for an equity scheme is debited on 5th and the application reaches the RTA on 5th at 2:30 p.m., with funds credited the same day. The RTA applies 5th NAV. If the application reaches at 4:00 p.m., it is treated as 6th receipt, subject to business-day rules, and the NAV of the next applicable business day is used.
Traps
Do not apply the application-date NAV after cut-off; do not ignore the liquid-scheme purchase cut-off; do not treat switch as free; do not forget exit load or ELSS lock-in.