How can one invest in a mutual fund? (Fresh Purchase)
After deciding on the type of scheme, the investor will have to fill in the Application form, attach a payment instrument and submit it at any of the funds' official points of acceptance centers before the cut off time.
The investor has to invest in rupees and units will be allotted to him in fractions depending upon the NAV.
For example, if the sale price of Birla Advantage Fund was Rs. 23.49 on December 14, 2001, if the investor decides to invest Rs. 25,000 (a round sum) on December 14, 2001, given the price, he will be allotted 1064.2826 units (25,000/23.49). This calculation assumes that there is no sales load applicable to the investor. It is also important to know that the applicable NAV is known only at the end of the day and not at the time the investor hands in the application.
For investments equal to and exceeding Rs 50,000, providing the Permanent Account Number (PAN) for all the unit holders is mandatory. Additionally, a copy of the PAN card should also be submitted along with the application form for verification. Investors have also to comply with the Know Your Client (KYC) procedure for such investment amounts.
What is the procedure to BUY ADDITIONAL units? (Additional Purchase)
Buying more units either of the same scheme or of a different scheme under the SAME FOLIO is an additional purchase, which can be done through Additional Purchase slips provided along with the account statement. After filling the same, the investor will have to attach a cheque with it and submit it at any of the official points of acceptance centers before the cut-off time.
What is the procedure to SWITCH units?
A switch request will have to be filled in and submitted at any of the official points of acceptance centers before the cut off time. SWITCH can be done with either partial or all units under a particular scheme to another scheme as specified by him under the same folio.
What is the procedure to REDEEM / REPURCHASE units?
If the fund is open ended, the investor has to send the repurchase requisition slip, duly completed and signed, to any of the official points of acceptance centres. It is possible to lodge repurchase requests on the Internet also. The redemption can be done for all units, partial units, or for an amount.
Redemption proceeds can be either be directly credited to the investors account OR cheques are issued with the investors bank details printed on them mandatorily. This is to prevent fraudulent encashment of repurchase cheques.
Can I take loan against my units in Mutual Fund? What is a Lien?
Yes. Investors can take loan against units. Banks treat Units as collateral security.
Units of a scheme may be offered as security by way of a pledge / charge in favor of scheduled banks, financial institutions, non banking financial companies (NBFCs) or any other body. The AMC will note and record such Pledged Units. Disbursement of such loans will be entirely at the discretion of the bank / financial institution / NBFC and the Mutual Fund assumes no responsibility thereof.
REQUIREMENTS for LIEN Marking:
Letter from investor and Pledgee clearly stating - Folio / Sub-account number, Scheme / Plan, Number of Units to be pledged, any other terms.
Additional Information :
1.
Lien marking requests need to necessarily specify number of units to be pledged. The reason for specifying this is the possibility of erosion in value of investment consequent to market action.
2.
Lien marking may be for partial number of units held - request for lien marking NEED NOT necessarily be for all units.
3.
In case of lien-marking of PARTIAL units, investor is free to transact (redeem / shift) on "free units"
4.
Investor will not be permitted to transact on units that are lien marked unless and until instructions to un-mark lien is given by the Pledgee.
5.
Investor however will be permitted to execute change in address, bank details during the existence of the Lien, unless specifically denied by pledgee in instructions to pledge units.
6.
While units are lien marked, in case investments are under Dividend option, in case of corporate action, dividend will be paid to investor unless specifically instructed by pledgee in instructions to pledge units.
Once the units are LIEN marked the units become the property of the bank until such time that the lien is invoked. The investor cannot redeem these units unless the bank confirms to do so. Once the loan is repaid by the investor, the units will become free from lien.
For unmarking of lien, written request from the bank is mandatory. The possible scenarios under which the unmarking of lien request can be received
1.
Pledgee has requested for unmarking of lien with / without redemption of units (full / partial) in favour of pledgee
2.
Pledgee has requested for unmarking of lien with the concurrence to redeem the units (full / partial) in favour of investor (as per investor's redemption request).
(see documents required under Documents section)
Privilege Account Services (PAS)
What is Privilege Account Services ?
PAS addresses customisation of portfolio management to serve the investment needs of High Net Worth individuals and Corporate investors. The service undertakes and encompasses :
Investment management
Execution of trades
Custody
Portfolio accounting
Audit of Portfolio Accounts
Why Privilege Account Services ?
Highly personalised one-to-one relationship
Highly flexible - Ability to move across asset classes in line with changing market trends and emerging situations.
Ease of stock picking across market caps, investment themes & businesses.
Focus on a larger investment universe.
Take positions in Derivatives based on specific views in appropriate accounts.
Privilege Account Services Structure
DISCRETIONARY
Portfolio to be managed at the discretion of the Portfolio Manager within the overall risk profile
NON-DISCRETIONARY
Management of the portfolio in accordance with the directions of the client within the overall risk profile
ADVISORY
Pure advisory function with no transaction execution responsibility
Privilege Account Pre-requisites
Client can come in with Cash or Securities (in demat form)
Minimum account size preferably Rs.50 lacs – subject to scalability
Client to execute Client Profiling Form, PAS Agreement and Power of Attorney
PAS Customisation
Key to personalised privilege account management lies in the individual client profiling in terms of:
Background Data
Identifies Client particular circumstances
Financial Goals & Objectives
Helps review client's investible asset and defines financial capacity to take investment risk
Investment Strategy Selection
Defines Client attitude or tolerance for investment risk and likely reactions to uncertain investment results.
Investment Outlook
Helps choose overall investment strategy based on portfolio description.
The Units shall stand transferred to the survivor in case of death of any of the joint holders
If the mode of holding is Joint
If the first holder expires, in a joint holding, the next named holder shall hold the units as the agent and trustee for the legal heirs of the first holder, and in case of the death of the second joint holder, the units shall be transferred to the next named holder, who shall hold the units as the agent for the legal heirs. In case of death of all the joint holders, the units shall be transferred to the nominee.
The joint unit holders may together nominate a person in whom all the rights in the units shall vest in the event of death of all the joint unit holders.
Scenario
Documents to be submitted
Multiple holders registered
Demise of First Holder
Mode of holding - Anyone / Survivor, Joint
Units will be transferred to the Second Holder, for which the following documents are required to be submitted:
Letter from the surviving unitholder(s) intimating the death of the unit holder.Copy of Death Certificate of First Holder duly certified in original by Bankers / AMC.
Address, Bank Details, PAN Number of Second Holder
Multiple holders registered
Demise of Joint Holder
Mode of holding - Anyone / Survivor, Joint
Units will continue to remain in name of First Unit Holder. First Unit holder has option to register any other person a joint holder, for which the following documents are required to be submitted :
Letter from the surviving unitholder(s) intimating the death of the joint holder.
Copy of Death Certificate of Joint Holder duly certified in original by Bankers / AMC.
Name, PAN Number, Signature of Second Holder in case a new holder is to be registered.
Application to evidence the claim on death of Unit holder.
Attested copy of the death certificate
Proof of Date of Birth. (if minor)
Proof of Identity of Nominee. (Passport, ration card, driving license, etc.)
Declaration and Indemnity against any other claims.
Copy of the Statement of Account issued by the AMC.
Notes: The above documents are required, irrespective of whether or not there is a will that has been made.
Single Holder - Testamentary Succession
In case of testamentary succession, one should consider if the? Will? needs to be? Probated?.
Probate (The Will has been Registered in court)
Without Probate (The Will has NOT been Registered in court)
When is the probate required: As per Section 57(a) read with Section 213(2) of Indian Succession Act, 1925
Wills that are made in Bombay, Madras, Bengal, Bihar, Orissa and Assam there is a mandatory requirement of a probate. Apart from these places, probate is not a mandatory requirement.
(This is applicable only in the case of Hindus, Buddhists, Jains or Sikhs.)
Scenario
Documents to be submitted
Single Holder - demise
No nomination Registered
The deceased however has left a WILL
Documents:
Application on death of Unit holder.
Attested copy of the will? Or? Probate of the will (as discussed above)
An attested copy of the death certificate.
Notarized affidavit of witness. (Refer Note 2 below)
Declaration that the Will provided is the last binding will and that there are no other claimants.
Indemnity against any other claims.
Copy of the Statement of Account issued by the AMC.
In case the claimant is a Minor:
An attested copy of the proof of date of birth.
Proof of identity of the natural guardian.
Notes:
If there is more than one claimant then any one of them claiming, has to obtain the NOC/Deed of Relinquishment from other legatees OR produce the Probate of the will/Letter of administration.
To obtain affidavit from Testator at a later stage is difficult. So we will not insist on the same unless affidavit is executed along with a Will at the time of execution of will.
Affidavit from Witnesses needs to be insisted upon when probate is not required. and prima facie there seems to be complications in transmission
A Claimant has to produce both, as probate of the will/Letter of administration decides the rights/ claims of person to the property of testator (i.e. Will maker), whereas, NOC/Deed of relinquishment clearly state executors intention to waive/ relinquish his claim which he is otherwise entitled for.
Single Holder - Intestate Succession
Intestate Succession ? The deceased has not left a will.
Scenario
Documents to be submitted
Single Holder - demise
No nomination Registered
The deceased has left NO WILL
Documents:
Application on death of Unit holder.
Attested copy of the death certificate.
Declaration & indemnity that she/he is the sole heir.
If there is more than one claimant then any one of them claiming has to obtain the Deed of Relinquishment from other legatees.
Affidavit for redemption of units.
An attested copy of the proof of date of birth if the claimant is a minor.
Copy of the Statement of Account issued by the AMC
Succession certificate/ legal heirship cert is also to be produced.
Notes:
If the value of the redemption amount is less than Rs.10,000/- then, a Succession Certificate / Legal Heir ship certificate need not be insisted upon.
A legal heirship certificate is granted by the local revenue officer certifying that the persons whose names have been listed in the certificate are the legal heirs of the deceased. A legal heirship certificate essentially serves the same purpose as a succession certificate.
A Legal heirship cert is normally given only for tenancy and compensation matters
Power of Attorney (POA)
Power of Attorney, is a legal document whereby a person delegates various authority to a Power of Attorney holder.
Power of Attorney registration requests may be received from i) Individual investors ii) Non Individual Investors iii) Online Clients
Requirements of a valid power of attorney document
POA submitted should clearly contain clause for investment
relating powers
POA submitted should be signed by both - investor and the contituent Power of Attorney
POA copy should be notarised in original or attested by a bank
In case of non-individual investors, the relevant extract of a Resolution authorising signatories to execute the Power of Attorney is required be submitted along with the POA.
A Power of Attorney document will be registered by Registrar & Transfer Agent, subject to above validations, and a confirmation letter issued to investor. Thereafter, the Power of Attorney holder is permitted to transact on behalf of the investor.
Nomination
Definition : "Nomination" is an option to nominate a successor to receive the units upon the demise of the first holder in case mode of holding is "single", or upon the demise of all holders in case investments are held "jointly"
In accordance with the provisions of regulation 29A of SEBI (Mutual Funds) Regulations 1996, the AMC provides an option to the unitholders to nominate a person in whom the units shall vest in the event of his death.
Where the units are held by more than one persons jointly, the joint unit holders may together, nominate a person in whom all the rights in the units shall vest in the event of the death of all the joint unitholders.
Additional Information:
Nominations can be made only by individuals applying for / holding units on their own behalf, singly or jointly.
Non-individuals including Society / trust / Body Corporate / Partnership Firm / Karta of Hindu Undivided Family / holder of Power of Attorney, cannot nominate.
Persons applying on behalf of minor / HUF/ Association of persons / Body of individuals / Power of Attorney holders cannot nominate.
One nominee per folio is permitted.
In case nominee is a minor, name and address of guardian to be provided
The nominee shall not be a trust, society, body corporate, partnership firm, Karta of HUF or a Power of Attorney holder.
Resident holders can nominate a NRI on a non-repatriable basis only
Nomination in respect of the units stands rescinded upon the transfer of units.Transfer of units in favor of a nominee shall be valid discharge by the AMC against the legal heir.
The cancellation of nomination can be made only by those individuals who hold units in their own behalf singly or jointly, and who made the original nomination.
On cancellation of the nomination, the nomination shall stand rescinded and the AMC shall not be under any obligation to transfer the units in favor of the nominee.
Demand Draft Charges
Investors residing at locations where the Fund does not have an official point of acceptance can make payment by demand drafts payable at locations where the application is to be lodged. The maximum charges so borne, would be restricted to the limits as prescribed by State Bank of India (SBI).
The present DD Charges of SBI are as under:
For Value : DD charges.
upto Rs 10000/- Rs30/-
For > Rs 10000/- Rs 3.50/- per Rs 1000/- Min Rs 50/- Max Rs 12500/-.
Transaction Related
