Unit study guide · NISM Series V-A
Investor Services
19 questions in this unit
What this unit covers
- For an ordinary ₹1 lakh equity-fund purchase on a business day, which situation qualifies for that day’s closing NAV? Times refer to the official acceptance point and availability to the scheme.
- Which pair correctly gives the liquid-fund PURCHASE cut-off and the ONLINE overnight-fund REDEMPTION cut-off, respectively? Use scheme-level rules, not an intermediary’s earlier processing deadline.
- A first-time resident individual wants to make a ₹500 mutual fund investment and has not completed KYC. The scheme accepts that investment amount. Which statement is correct?
- A sole mutual fund unitholder names a nominee but gives that person no separate operating authority. What is the main purpose of the nomination?
- Under SEBI’s 14 February 2025 CAS circular, by which day after month-end must a depository issue the MONTHLY ELECTRONIC CAS for a month with transactions?
- An investor’s half-yearly CAS reports ₹600 as gross distributor commission and separately reports the plan’s average TER. Which interpretation is correct?
- An investor has already complained to the AMC’s designated grievance officer but is dissatisfied with the response. For an eligible complaint about the mutual fund service, which is the appropriate SEBI grievance platform?
- An eligible monetary dispute with an AMC remains unresolved after the investor has approached the AMC and used SCORES. No court or other forum is considering it. Which statement correctly describes SMART ODR?
- A valid equity-fund purchase application reaches the official acceptance point on Monday at 2 pm. The money becomes usable by the scheme on Tuesday at 3:10 pm and remains available thereafter. Monday, Tuesday and Wednesday are all business days. Which closing NAV applies?
- Three SIP instalments of ₹3,000 each are fully invested at NAVs of ₹10, ₹12 and ₹15. With no charges or redemptions, what is the average acquisition cost per unit?
- An investor holds 1,000 units at NAV ₹42 immediately before a ₹2-per-unit IDCW distribution. The full distribution is reinvested at the ex-distribution NAV. Assume NAV falls by exactly the distribution amount and ignore taxes, charges and market movement. What are the resulting units and investment value?
- Under the minor-to-major provisions in SEBI’s March 2026 mutual fund master circular, what happens to a SIP registered in a minor’s folio when the unitholder becomes a major but has not completed the required status update?
- Under SEBI’s March 2026 mutual fund master circular, a parent makes a permitted subscription into a minor’s folio from the parent’s sole bank account. Where must subsequent redemption proceeds be credited, after the required checks?
- An investor owns 5,000 units. The folio record shows 2,000 units under a bank’s lien and 3,000 free units. Under the stated lien terms, lien-marked units need the bank’s release before redemption. A request redeems 2,500 free units. With no other restriction or transaction, how many free units remain?
- An investor is asked to complete a FATCA/CRS self-certification as part of the applicable account documentation. What information is this process principally intended to establish?
- A company’s mutual fund account checklist requires both completed entity KYC and a certified board resolution authorising investment and naming the authorised signatories. KYC is complete. The application is signed, but no such authority document is provided. Which missing document directly addresses the stated gap?
- A folio has two adult holders and an operating mandate that requires BOTH holders to authorise redemptions. Neither has granted a power of attorney. A redemption request is signed only by the first holder. What is the relevant processing issue?
- An AMC confirms that an investor’s SIP cancellation is effective before the next scheduled purchase. The investor gives no redemption or switch instruction. What happens to the units already allotted through earlier instalments?
- Which request is a non-financial folio-maintenance transaction rather than a purchase, redemption or switch of units?
Key ideas
From the practice bank · 1
For an ordinary ₹1 lakh equity-fund purchase on a business day, which situation qualifies for that day’s closing NAV? Times refer to the official acceptance point and availability to the scheme.
Both the application and money available for use meet the 3 pm cut-off. The ordinary equity-fund purchase cut-off is 3 pm. The question gives official receipt times, not the time an investor began filling a form. Check the application and funds separately. Only the 2:30 pm application with funds usable at 2:45 pm meets both conditions. The ₹1 lakh amount does not remove the realisation requirement. A bank debit or an instruction to pay is not the same as usable money in the scheme. Remember: For a purchase NAV question, track two clocks: valid application receipt and usable-funds availability.
Hint Common mistake: Checking only the application time or assuming that a small purchase gets same-day NAV before funds arrive.
VA-013From the practice bank · 2
Which pair correctly gives the liquid-fund PURCHASE cut-off and the ONLINE overnight-fund REDEMPTION cut-off, respectively? Use scheme-level rules, not an intermediary’s earlier processing deadline.
The liquid purchase cut-off is 1:30 pm. The April 2025 SEBI circular sets 7 pm for online overnight redemptions. First identify the liquid-fund transaction as a purchase. Its cut-off is 1:30 pm, subject also to the applicable fund-availability requirements. Next identify the overnight-fund transaction as an online redemption. SEBI’s April 2025 circular specifies 7 pm for that combination, effective from 1 June 2025. The 7 pm rule does not turn liquid purchases or all mutual fund transactions into evening transactions. This question asks for cut-off times, not the resulting NAV date. Remember: Identify category, transaction direction and channel before selecting a cut-off time.
Hint Common mistake: Applying a redemption exception to purchases, or assuming that every mutual fund transaction uses 3 pm.
VA-014From the practice bank · 3
A first-time resident individual wants to make a ₹500 mutual fund investment and has not completed KYC. The scheme accepts that investment amount. Which statement is correct?
KYC applies to the investor. A small accepted purchase amount does not by itself waive it. The question states that the investor has not completed KYC. It does not describe an investor whose existing valid KYC can be used. The fact that ₹500 is accepted as a purchase amount answers a minimum-subscription question, not the KYC question. The investor must follow the applicable KYC process instead of relying on the small amount, a bank account or a future redemption date. Remember: Separate minimum investment eligibility from investor-identification compliance.
Hint Common mistake: Confusing a small-ticket or documentation concession with a blanket exemption from KYC.
VA-023From the practice bank · 4
A sole mutual fund unitholder names a nominee but gives that person no separate operating authority. What is the main purpose of the nomination?
Nomination helps the transmission process following the holder’s death. It does not itself make the nominee a present joint owner or operator. The folio has a sole holder and the nominee has no separate operating authority. SEBI’s May 2026 nomination circular describes nomination as helping identify the person for transfer and facilitating transmission after the investor’s death. The nomination therefore does not by itself give immediate ownership or a right to operate the folio. The question does not ask how a succession-law dispute between claimants would be resolved. Remember: Distinguish a nominee for transmission from a joint holder or authorised operator.
Hint Common mistake: Assuming that being named as nominee gives an immediate right to redeem or manage the investor’s units.
VA-028From the practice bank · 5
Under SEBI’s 14 February 2025 CAS circular, by which day after month-end must a depository issue the MONTHLY ELECTRONIC CAS for a month with transactions?
The circular sets the depository’s electronic monthly CAS deadline at the 12th day after month-end. The question specifies a depository-issued statement, not every statement an AMC or RTA may send. It also specifies a monthly electronic statement for a transaction month, not a physical or half-yearly statement. For that combination, the February 2025 circular gives the 12th day after month-end. Data collection and physical dispatch have different deadlines. Remember: Before recalling a CAS date, identify the issuer, monthly or half-yearly period, and electronic or physical delivery.
Hint Common mistake: Using one familiar CAS deadline for every issuer and delivery format.
VA-037From the practice bank · 6
An investor’s half-yearly CAS reports ₹600 as gross distributor commission and separately reports the plan’s average TER. Which interpretation is correct?
Gross commission is not net profit. The separate TER disclosure is an expense-ratio measure, not a second bill to deduct from the stated holding value. Read the label attached to the ₹600 amount. It is reported as gross distributor commission for the half-year. Gross does not mean what remains after the distributor’s operating costs. Those costs cannot be inferred from this statement. The plan’s average TER is a separate disclosure. Neither field by itself instructs the investor to reduce the already reported NAV-based holding value again. Remember: Read commission and TER as distinct disclosures, and do not convert gross commission into net profit or double-count an expense.
Hint Common mistake: Treating disclosed commission as the distributor’s take-home profit, or deducting disclosed costs a second time.
VA-038From the practice bank · 7
An investor has already complained to the AMC’s designated grievance officer but is dissatisfied with the response. For an eligible complaint about the mutual fund service, which is the appropriate SEBI grievance platform?
SCORES is SEBI’s grievance platform. The investor has already taken the required first step of approaching the entity. The disputed service belongs to the mutual fund/AMC. The question does not describe a separate bank-service failure. The investor has already approached the AMC’s designated grievance officer. SCORES is the relevant SEBI platform for an eligible unresolved securities-market complaint. Submission does not guarantee a particular result or compensation. Remember: Identify the complaint’s subject and first approach the responsible entity before using the relevant regulator’s grievance route.
Hint Common mistake: Choosing a complaint authority based only on the payment channel rather than the service complained about.
VA-039From the practice bank · 8
An eligible monetary dispute with an AMC remains unresolved after the investor has approached the AMC and used SCORES. No court or other forum is considering it. Which statement correctly describes SMART ODR?
The ODR process includes these distinct stages for eligible disputes. Access to the process does not guarantee a particular result. The scenario specifies that the investor has approached the entity and that the dispute is eligible for the stated route. SMART ODR covers the relevant securities-market entities, including mutual funds and AMCs. Conciliation seeks a settlement. Where the process requires it, arbitration provides a formal determination. Accessing the platform does not guarantee that the investor will win. The scenario includes prior SCORES use, but this does not mean that exhausting SCORES is a universal prerequisite for every ODR matter. Remember: Distinguish a complaint portal from a process for conciliation and arbitration.
Hint Common mistake: Assuming that an unresolved complaint automatically becomes an arbitration case or guarantees compensation.
VA-040From the practice bank · 9
A valid equity-fund purchase application reaches the official acceptance point on Monday at 2 pm. The money becomes usable by the scheme on Tuesday at 3:10 pm and remains available thereafter. Monday, Tuesday and Wednesday are all business days. Which closing NAV applies?
Monday has the application but not the funds. Tuesday’s fund availability is after the cut-off. Wednesday is the first day when both requirements are met in time. Monday: the 2 pm application is in time, but no usable funds are present. Monday therefore does not qualify. Tuesday: funds arrive at 3:10 pm, after the 3 pm cut-off. Tuesday does not qualify either. Wednesday: the valid application is already lodged and the money remains usable before 3 pm. Wednesday’s closing NAV therefore applies. Remember: When funds miss a day’s cut-off, move to the next eligible business day and check the conditions again.
Hint Common mistake: Using the calendar date of realisation without checking the time of realisation.
VA-041From the practice bank · 10
Three SIP instalments of ₹3,000 each are fully invested at NAVs of ₹10, ₹12 and ₹15. With no charges or redemptions, what is the average acquisition cost per unit?
The instalments buy 300, 250 and 200 units, or 750 units in total. Total cost ₹9,000 divided by 750 units is ₹12. The first instalment buys ₹3,000 / ₹10 = 300 units. The next two buy ₹3,000 / ₹12 = 250 units and ₹3,000 / ₹15 = 200 units. Total money invested is ₹9,000 and total units are 300 + 250 + 200 = 750. Average acquisition cost per unit = ₹9,000 / 750 = ₹12.00. This calculation describes the cost of the acquired units. It does not establish that SIP investing guarantees a profit or that any future NAV will exceed that cost. Remember: For a SIP’s average unit cost, total the actual units before dividing total investment by them.
Hint Common mistake: Averaging NAVs without recognising that equal money buys more units at lower prices.
VA-072From the practice bank · 11
An investor holds 1,000 units at NAV ₹42 immediately before a ₹2-per-unit IDCW distribution. The full distribution is reinvested at the ex-distribution NAV. Assume NAV falls by exactly the distribution amount and ignore taxes, charges and market movement. What are the resulting units and investment value?
The ₹2,000 reinvestment buys 50 units at ₹40 and total value remains ₹42,000 under the assumptions. The distribution is 1,000 × ₹2 = ₹2,000. The ex-distribution NAV is ₹42 − ₹2 = ₹40. New units = ₹2,000 ÷ ₹40 = 50. Total units after reinvestment = 1,000 + 50 = 1,050. The resulting value is 1,050 × ₹40 = ₹42,000, equal to the pre-distribution value. No separate ₹2,000 cash payout should be added because that amount has already purchased the 50 extra units. Remember: Reinvestment increases units at the applicable ex-distribution NAV, not at the old NAV.
Hint Common mistake: Using the pre-distribution NAV or counting both the reinvested amount and a cash payout.
VA-093From the practice bank · 12
Under the minor-to-major provisions in SEBI’s March 2026 mutual fund master circular, what happens to a SIP registered in a minor’s folio when the unitholder becomes a major but has not completed the required status update?
This follows the stated minor-to-major requirements and suspension of systematic instructions. The question specifically states that the minor-to-major update is incomplete. The cited provisions require the unitholder’s status and the associated KYC and bank details to be updated. The stated systematic-transaction provision suspends instructions such as SIPs on attainment of majority until the required formalities are completed. Nomination is not a substitute for that update. Remember: Check a folio’s change of status before assuming an existing systematic mandate can keep operating.
Hint Common mistake: Assuming a mandate signed during minority remains sufficient after the investor becomes a major.
VA-095From the practice bank · 13
Under SEBI’s March 2026 mutual fund master circular, a parent makes a permitted subscription into a minor’s folio from the parent’s sole bank account. Where must subsequent redemption proceeds be credited, after the required checks?
This retains the required verified minor-account condition while allowing the stated joint-account arrangement. The question assumes the parent-funded subscription was valid. It does not need to be rejected merely because the parent supplied the money. The cited redemption provision requires payment to the minor’s verified bank account, including a permitted account held with the parent or legal guardian, after completing the stated checks. Funding the purchase does not by itself make the parent’s sole account the correct redemption account. Remember: For a minor’s folio, check the purchase-payment rule and redemption-bank rule separately.
Hint Common mistake: Assuming redemption must go back to the same sole account from which a parent paid.
VA-096From the practice bank · 14
An investor owns 5,000 units. The folio record shows 2,000 units under a bank’s lien and 3,000 free units. Under the stated lien terms, lien-marked units need the bank’s release before redemption. A request redeems 2,500 free units. With no other restriction or transaction, how many free units remain?
This is the remaining free balance after deducting the redemption from the 3,000 free units. The opening free balance is 3,000 units. The separate 2,000 units under lien are not included in that free balance. The request uses 2,500 of the free units, leaving 3,000 − 2,500 = 500 free units. The total remaining holding is 5,000 − 2,500 = 2,500 units. It consists of 2,000 lien-marked units plus 500 free units. Redeeming free units does not itself release the lien on the other units. Remember: After a redemption, reconcile total units into the lien-marked and free balances separately.
Hint Common mistake: Using the total holding as the available balance even though some units remain under lien.
VA-113From the practice bank · 15
An investor is asked to complete a FATCA/CRS self-certification as part of the applicable account documentation. What information is this process principally intended to establish?
Relevant tax status is the reason for requesting this form and its related reporting information. The form belongs to a tax-information and reporting process. It seeks the status and related particulars needed under that process. It is separate from a risk-profile questionnaire, a nomination instruction and a distributor-remuneration disclosure. Tax status should be determined using the applicable form and rules. It should not be guessed solely from a mailing address or investment preference. Remember: Recognise the purpose of each onboarding document before deciding what information it should contain.
Hint Common mistake: Assuming a tax self-certification replaces either the investor’s risk assessment or the nomination form.
VA-114From the practice bank · 16
A company’s mutual fund account checklist requires both completed entity KYC and a certified board resolution authorising investment and naming the authorised signatories. KYC is complete. The application is signed, but no such authority document is provided. Which missing document directly addresses the stated gap?
This supplies the precise investment and signatory authorisation required by the scenario’s checklist. The stem states that entity KYC is already complete, so repeating the identity documents does not resolve the specified missing authority. The account checklist separately requires a certified board resolution authorising the investment and identifying the signatories. A signed application alone does not supply that missing evidence under the stated checklist. The required resolution directly addresses the gap. Remember: For institutional applications, distinguish who the entity is from who may authorise and sign its transactions.
Hint Common mistake: Assuming that completing entity KYC automatically proves every employee’s authority to invest for the entity.
VA-115From the practice bank · 17
A folio has two adult holders and an operating mandate that requires BOTH holders to authorise redemptions. Neither has granted a power of attorney. A redemption request is signed only by the first holder. What is the relevant processing issue?
The second holder’s required authorisation is missing. The hypothetical mandate explicitly requires both holders to authorise a redemption. Only one authorisation is present and no separate authority can substitute. The missing authorisation must be addressed before the request meets that mandate. Remember: Read the operating mandate before deciding whose authorisation is required.
Hint Common mistake: Assuming every multi-holder folio operates on an either-or-survivor basis.
VA-141From the practice bank · 18
An AMC confirms that an investor’s SIP cancellation is effective before the next scheduled purchase. The investor gives no redemption or switch instruction. What happens to the units already allotted through earlier instalments?
This separates the future purchase instruction from the units already owned. The cancellation stops the future scheduled purchases described in the stem. The earlier units are already an investment holding. No redemption, switch or other disposal is specified, so the cancellation alone leaves those units invested. Remember: Stopping future investments and withdrawing existing investments are separate decisions.
Hint Common mistake: Using “stop SIP” and “redeem the folio” as though they mean the same transaction.
VA-142From the practice bank · 19
Which request is a non-financial folio-maintenance transaction rather than a purchase, redemption or switch of units?
The bank-detail update is folio maintenance and does not itself dispose of or acquire units. Updating registered bank details changes a folio attribute used for future payments. The other three choices change the unit investment through purchase, redemption or a switch. Calling a redemption systematic does not make it non-financial. Remember: Classify the request by what changes: account details or the unit investment.
Hint Common mistake: Treating a service request as non-financial merely because it is automated.
VA-143