NISM_VA_Ch09_Investor Services

NISM VA Investor Services July 13, 2022 Day – 07

Objectives By the end of the session you will be able to: • Know the NFO process, NFO price, on-going price for subscription of mutual fund schemes • Get clear idea on investment plans and options, and allotment of mutual fund units to investors • Understand mutual fund application form, financial transactions in mutual fund online and offline, its cut off timings, and time stamping • Explain KYC requirements for mutual funds, systematic transactions, and its operational aspects • Describe the process of non financial transactions in mutual funds

New Fund Offer Process NFO means when the units of Mutual Funds are offered for the first time in the market. Decision on Suitable time Events for scheme table intermediaries AMC Scheme Advertising and Scheme documents information public relations and application forms campaigns 3

New Fund Offer Price and Investment Plan and Services New Fund Offer Price Investment Plan and Services New Fund Offer (NFO) Price is the Direct and Regular Plans price per unit that the investors have to pay to invest during the NFO. Ongoing price for purchase, Dividend Pay-out, Dividend Re- redemption (sale) / switch outs by Investment and Growth Options investors is the price at which the 4 investor purchases or receives redemptions / switch-outs.

Implications of different options in Mutual Funds Parameter Income Distribution Income Distribution Growth Option cum capital cum capital No Dividend received in withdrawal withdrawal bank account N.A. (Pay out Option) (Re-investment Tax on Dividend Yes Option) No No Increase in number of Yes NAV captures The units on account of Yes portfolio changes reinvestment of dividend No Yes entirely. NAV change NAV declines to the extent of dividend. NAV declines to the extent of dividend. 5

Allotment of Units to the Investors NFO On-going offer In a rights issue In a bonus issue 6

Eligibility to Invest Individual Investors Non Individual Investors 7

Filling the Application Form for Mutual Funds Direct Plan and Unit Holder Minor as a unit POA as a unit Regular Plan Information holder holder Status of holder KYC Details FATCA and CRS Bank Account and Mode of Details Details Holding Investment Payment Details Unit Holding Nomination Details Option 8 Minimum Investment

Financial Transactions with Mutual Funds Initial Purchase of Mutual Fund 12 Units Additional Purchases Repurchase of Units 43 Switch 9

Payment Mechanism For Mutual Funds Purchases One-Time Mandate Online transactions Internet banking E-Wallets Cards M-Banking National Unified USSD Cash Payments Cheque/Demand Draft Stock exchange Platform platform and MFU platform Aadhaar Enabled Application Supported Unified Payment 10 Payment Service by Blocked Amount Interface (UPI)

Type of Scheme: Equity Oriented Funds and Debt Funds Type of Scheme Transaction Cut off time Applicable NAV 3.00 pm Equity oriented funds Purchases and Switch Irrespective of the time of and debt funds (except ins receipt of application, NAV of liquid funds) in respect of the business day on which the transaction of any funds are available for amount utilization without availing of any credit facility before the cut-off time of that day is applicable. 11

Type of Scheme: Liquid Funds Type of Scheme Transaction Cut off time Applicable NAV 1.30 pm Liquid funds Purchases and • If application received up to the cut off on a day and funds Switch ins are available for utilization before the cut-off time, without availing any credit facility, whether intra day or otherwise then closing NAV of the day immediately preceding the day of the receipt of application is applicable. • If application received after cut off time on a day and funds are available for utilization on the same day whether intra- day or otherwise, the closing NAV of the day immediately preceding the next business day is applicable. • Irrespective of the time of receipt of applications, where the funds are not available for utilization before the cut-off time, without availing any credit facility, whether intraday or otherwise, the closing NAV of the day immediately preceding the day on which the funds are available for utilization. 12

Type of Scheme: Equity Oriented Funds and Debt Funds (Other than Liquid Funds) Type of Scheme Transaction Cut off time Applicable NAV 3.00 pm Equity Oriented Redemptions and • Same day NAV if received before cut off Funds, Debt funds Switch outs time. (Other than Liquid • Next business day NAV for applications funds) received after cut off time. 13

Type of Scheme: Liquid Funds Type of Scheme Transaction Cut off time Applicable NAV 3.00 pm Liquid funds Redemptions and Switch • NAV of day immediately preceding the next outs business day, if received before cut off time. • If redemption request is received through Instant Access Facility (IAF) upto the cut off time, then the lower of: (a) NAV of previous calendar day and (b) NAV of calendar day on which application is received. • Next business day NAV for applications received after cut off time. • If redemption request is received through Instant Access Facility (IAF) after the cut off time, then the lower of: (a) NAV of calendar day on which such application is received and (b) NAV of next calendar day 14

Time Stamping When you submit your application form to your mutual fund (MF) or its registrar’s office, it is passed through a little machine that stamps the time and day of submission. This process is called time-stamping and is the first acknowledgement or proof of your investment. 15

KYC Documents Permanent Account Number Proof of Address (PAN) Card Categories of investors who are exempt from producing PAN must provide an alternate document such as the Aadhaar card, Passport, Voter’s Id, Driving License or other photo-identity card which serve as the proof of identity 16

KYC Registration Agencies 01 02 03 Centralised KYC KYC through e- KYC through Registration KYC service of Intermediaries Agencies UIDAI 17

Systematic Transaction 05 Transfer of Income Distribution 04 cum capital withdrawal plan Switch 03 Systematic Transfer Plan 02 Systematic Withdrawal Plan 01 Systematic Investment Plan 18

Operational Aspects of Systematic Transactions Triggers SIP Top-up Facility Execution of Systematic Renewal and Transactions Cancellation of SIP Registering and Cancellation Registration and of STP and Switches Cancellation of SWP 19

Non-Financial Transactions in Mutual Funds Demat Account Pledge/Lien of Change in Folio Details Units Transmission of Nomination Units 20

Change in Status of Special Investor Categories Minor turned Major NRI to Resident Change in Karta of Indian HUF 21

Summary: • Mutual fund is an investment avenue for a large number of investors. • Financial transaction in mutual funds include purchase of mutual fund units, redemptions i.e., sale transactions and switches. • Payments for mutual fund purchases need to be made through the banking channel modes that have been approved by the regulators. • SEBI’s guidelines prescribe the turnaround times for investors’ transactions with the mutual fund

Thank you