10.11 Non-Financial Transactions, Special Investor Categories and Turnaround Times

NISM-Series-V-A: Mutual Fund Distributors Certification Examination Exam

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1 Chapter 1: Introduction & Exam Overview

1.1 About the NISM-Series-V-A Examination 1.2 The 12-Unit Curriculum Map and a Study Plan

2 Chapter 2: Investment Landscape

2.1 Investors and Their Financial Goals 2.2 Savings or Investments? 2.3 Different Asset Classes 2.4 Investment Risks 2.5 Risk Measures and Management Strategies 2.6 Behavioural Biases in Investment Decision Making 2.7 Risk Profiling 2.8 Asset Allocation and Do-It-Yourself versus Professional Help

3 Chapter 3: Concept and Role of a Mutual Fund

3.1 Concept of a Mutual Fund 3.2 Classification of Mutual Funds 3.3 Growth of the Mutual Fund Industry in India

4 Chapter 4: Legal Structure of Mutual Funds in India

4.1 Structure of Mutual Funds in India 4.2 Key Constituents of a Mutual Fund 4.3 AMC Organisation Structure and Service Providers 4.4 Role and Function of AMFI

5 Chapter 5: Legal and Regulatory Framework

5.1 Role of Regulators in India 5.2 Role of SEBI and the Mutual Fund Regulations 5.3 Due Diligence Process by AMCs for Distributors 5.4 Investor Grievance Redress Mechanism 5.5 AMFI Code of Conduct for Intermediaries

6 Chapter 6: Scheme Related Information

6.1 Mandatory Documents I: Scheme Information Document and Statement of Additional Information 6.2 Mandatory Documents II: Key Information Memorandum and the Advertisement Code 6.3 Non-Mandatory Disclosures

7 Chapter 7: Fund Distribution and Channel Management Practices

7.1 The Role and Importance of Mutual Fund Distributors 7.2 Different Kinds of Mutual Fund Distributors 7.3 Modes of Distribution 7.4 Pre-requisites to Become a Distributor of a Mutual Fund 7.5 Revenue for a Mutual Fund Distributor 7.6 Commission Disclosure Mandated by SEBI 7.7 Distributors versus Investment Advisers, Nomination Facilities and Change of Distributor

8 Chapter 8: Net Asset Value, Total Expense Ratio and Pricing of Units

8.1 Fair Valuation Principles 8.2 Computation of Net Assets of a Scheme and NAV 8.3 Dividends and Distributable Reserves 8.4 Entry and Exit Load and Its Impact on NAV 8.5 The Expense Ratio Framework: Base Expense Ratio, Brokerage and Statutory Levies 8.6 Key Accounting and Reporting Requirements 8.7 NAV, Total Expense Ratio and Pricing of Units for the Segregated Portfolio

9 Chapter 9: Taxation

9.1 Applicability of Taxes in Respect of Mutual Funds 9.2 Capital Gains on Mutual Fund Units 9.3 Dividend (IDCW) Income and Tax Deducted at Source 9.4 Stamp Duty and Securities Transaction Tax on Mutual Fund Units 9.5 Setting Off Capital Gains and Losses under the Income Tax Act 9.6 Tax Benefit under Section 80C and Applicability of GST

10 Chapter 10: Investor Services

10.1 The New Fund Offer Process 10.2 New Fund Offer Price and Ongoing Offer Price for Subscription 10.3 Investment Plans and Services 10.4 Allotment of Units and Account Statements 10.5 Mutual Fund Investors: Who Can Invest 10.6 Filling the Application Form for Mutual Funds 10.7 Financial Transactions with Mutual Funds 10.8 Cut-Off Time and Time Stamping 10.9 KYC Requirements for Mutual Fund Investors 10.10 Systematic Transactions and Their Operational Aspects 10.11 Non-Financial Transactions, Special Investor Categories and Turnaround Times

11 Chapter 11: Risk, Return and Performance of Funds

11.1 General and Specific Risk Factors 11.2 Factors That Affect Mutual Fund Performance 11.3 Drivers of Returns and Risk in a Scheme 11.4 Measures of Returns 11.5 SEBI Norms Regarding Representation of Returns 11.6 Risks in Fund Investing: The Investor's Perspective 11.7 Measures of Risk and Provisions Relating to Credit Risk

12 Chapter 12: Mutual Fund Scheme Performance

12.1 Benchmarks and Performance 12.2 Price Return Index or Total Return Index 12.3 Basis of Choosing an Appropriate Performance Benchmark 12.4 Benchmarks for Equity Schemes 12.5 Benchmarks for Debt Schemes and Other Schemes 12.6 Quantitative Measures of Fund Manager Performance 12.7 Tracking Error and Scheme Performance Disclosure

13 Chapter 13: Mutual Fund Scheme Selection

13.1 Scheme Selection Based on Investor Needs, Preference and Risk Profile 13.2 Risk Levels in Mutual Fund Schemes 13.3 Scheme Selection Based on Investment Strategy 13.4 Selecting a Scheme Across AMCs or Within a Scheme Category 13.5 Selecting Options in Mutual Fund Schemes and Do's and Don'ts

10.11 Non-Financial Transactions, Special Investor Categories and Turnaround Times

Key Takeaways Explain This Topic AI

Non-financial transactions change folio details without changing the value of the holding.

Up to ten nominees may be registered, and an investor declining to nominate must sign an opt-out declaration.

Transmission transfers units to nominees or legal heirs on the death of a unitholder.

A change in special investor status, such as a minor attaining majority, freezes the folio until documentation is complete.

Prescribed turnaround times govern how quickly each service request must be processed.

Last updated: August 2026

What Counts as Non-Financial

A non-financial transaction changes information in the folio without changing the value of the holding.

• Transaction Typical requirement
• Change of address Request with proof of new address; KRA update where applicable
• Change of bank mandate Request with cancelled cheque of the new account and proof of the old
• Change of contact details Request; mobile and email must be validated
• Registration or change of nomination Prescribed form signed by all holders
• Change of mode of holding Signed by all holders
• Change of distributor code Investor's written instruction
• PAN or KYC update Through the KRA
• Registration of a lien or pledge Lender's documentation and folio marking
• Transmission on death Death certificate and prescribed documents
• Conversion between physical and demat holding Prescribed conversion request

Change of bank mandate is the most sensitive of these, because a fraudulent change would redirect an investor's money. It therefore requires verification of both the old and the new account and is subject to a cooling period at some fund houses, during which redemption to the newly added account may be restricted.

Nomination

The framework was substantially revised with effect from 1 March 2025 .

• Up to ten nominees may be registered per folio, with the percentage share specified for each
• Every investor must either nominate or sign a declaration opting out — one or the other is required
• Joint holders are not obliged to nominate but may do so

Under the rule of survivorship , assets in a jointly held folio pass to the surviving holders, without affecting existing nominations or the mode of operation

A power of attorney holder cannot make the nomination on the investor's behalf; the investor must declare the nominee

Nomination is not a substitute for a will and does not override succession law, but it makes transmission dramatically simpler for the family, and it costs nothing. A distributor who ensures every client folio carries a valid nomination has done more practical good than most portfolio adjustments achieve.

Transmission

Transmission is the transfer of units on the death of a unitholder — distinct from transfer , which is a voluntary disposition between living persons.

• Situation Process
• Joint holding, one holder dies Units vest in the surviving holders on submission of the death certificate
• Sole holder with a registered nominee Units transmitted to the nominee on prescribed documentation
• Sole holder without a nominee Legal heirs must establish entitlement through succession documents

Documents typically required include the death certificate, the transmission request form, KYC of the claimant, bank details of the claimant, and, where there is no nominee, succession documentation such as a will with probate, a succession certificate or a legal heirship certificate together with an indemnity for smaller amounts.

The contrast is worth stating to clients plainly: with a nominee, transmission takes weeks; without one, it can take many months and involve court process.

Change in Status of Special Investor Categories

Several status changes require folio action and, in most cases, freeze transactions until documentation is complete.

Minor attaining majority

Covered in section 10.5 and the most examined of these. On the eighteenth birthday the folio is frozen , standing instructions cease , and the now-major investor must submit fresh KYC, PAN, bank details in their own name and an attested signature. The guardian's authority ends on that date.

Resident becoming non-resident

The investor must inform the AMC and update the folio status. Bank details must change to an NRO or NRE account , KYC must be updated to non-resident status, and the tax treatment changes — most significantly, TDS begins to apply to capital gains under section 195. Existing systematic instructions may need re-registration against the new bank account.

Non-resident becoming resident

The reverse: status updated to resident, bank details changed to a resident account, and TDS on capital gains ceases.

Change in constitution of a non-individual investor

A change of partners, directors or authorised signatories requires fresh authorisation documents and specimen signatures, without which instructions cannot be acted upon.

Change in KYC status

An investor moving to on-hold status cannot transact until the deficiency is regularised.

Investor Transactions: Turnaround Times

SEBI and AMFI prescribe turnaround times so that service standards are measurable rather than a matter of each fund house's practice.

• Service Prescribed timeline
• Allotment confirmation by email or SMS Within 5 business days
• Redemption or repurchase proceeds Within 3 working days
• Redemption proceeds, schemes with at least 80% overseas exposure Within 5 working days
• IDCW payment Within 7 working days of the record date
• Penal interest for delay in the above 15% per annum for the delay period
• Action Taken Report on a SCORES complaint Within 21 days

Non-financial requests such as address, bank mandate and nomination changes are processed within the timelines published by each AMC and RTA, generally a few business days, with bank-mandate changes taking longer because of the additional verification.

Why Turnaround Times Matter to a Distributor

Most investor dissatisfaction is about speed , not about returns. An investor who knows redemption proceeds take three working days waits calmly; one who expected the money the same evening starts calling on day one.

Setting the expectation at the point of the request — "this will be with you by Thursday" — is the single cheapest service improvement available, and it depends on knowing the numbers in the table above.