Investor Services: formula sheet

Key formulas

KYC requirement

KYC compliant = identity proof + address proof + PAN (unless exempt) + verification

An investor must be KYC compliant before the first investment. Exemption rules apply to PAN only for specified categories.

CKYC identifier

KIN = 14-digit KYC Identification Number

Issued by the Central KYC Records Registry. Do not confuse it with the PAN, which has 10 characters.

PAN format

PAN = 10 alphanumeric characters (5 letters + 4 digits + 1 letter)

Issued by the Income Tax Department.

FATCA/CRS

FATCA = US tax compliance; CRS = OECD global standard for automatic exchange of tax information

Both need a self-declaration of tax residency by the investor at onboarding.

KRA vs CKYC

KRA = securities market KYC record; CKYC = central record across the financial sector

A record in one is not automatically a record in the other.

Single holding

One holder = one signatory

Only that person operates the folio. On death, units go to the nominee or legal heirs.

Joint holding

All holders must sign together

Default mode if no mode is stated for a folio with more than one holder. Maximum three holders.

Anyone or survivor

Any one holder may sign alone

Convenient, but each holder can redeem the whole folio alone. On death of a holder, the survivor becomes the holder after transmission formalities.

Minor investor

Minor as sole holder + guardian operates

No joint holders with a minor. Guardian must be a natural or legal guardian. Status must be updated on becoming major.

HUF

Karta signs for the HUF

Folio is in the HUF name, not in the Karta's personal name.

NRI

Repatriation: NRE/FCNR | Non-repatriation: NRO, or NRE/FCNR

Repatriation needs funds from NRE/FCNR (or another repatriable source). Non-repatriation can use NRO, and also NRE/FCNR. NRO can be used only for non-repatriation. Check country restrictions of the fund house.

Who can nominate

Individuals holding units on their own behalf, singly or jointly, can nominate; non-individuals cannot

Non-individuals (including HUF, companies, trusts, societies and partnership firms) and holders of a power of attorney cannot nominate. Nomination is also not allowed in a folio held on behalf of a minor.

Nominee eligibility

Nominee = generally an individual; a minor can be a nominee only if a guardian is named

A minor nominee needs a named guardian to act on the nominee's behalf. Non-resident Indians can be nominees, subject to applicable rules. A specified charitable or religious trust may be a nominee only as the rules permit. Other non-individuals cannot be nominees. Check the workbook.

Transmission order

Joint folio: surviving holder(s) → then nominee → then legal heirs

Single holder: nominee → legal heirs if no nominee.

Nominee's status

Nominee = authorised to receive the units, holding them for the legal heirs; not the absolute owner

The nominee receives the units on the holder's death and holds them for the benefit of the legal heirs, who keep their rights under the will or succession law.

Bank mandate change

Signed request + new bank proof (e.g. cancelled cheque with name or bank statement)

Used because redemption proceeds go to the registered bank account.

Opting out of nomination

Opt-out must be a written declaration signed by all holders

SEBI requires nomination details or a signed opt-out declaration for new folios, so investors must either nominate or explicitly opt out. The opt-out is recorded. In a joint folio, every holder must sign the declaration. If an investor opts out, the units on death are transmitted to the legal heirs on production of the required legal documents.

SIP

Fixed amount × fixed interval → units bought = amount ÷ NAV on that date

Lower NAV gives more units. Average cost per unit = total invested ÷ total units.

Average cost per unit

Total amount invested ÷ Total units purchased

This is not the simple average of the NAVs when the amount is fixed. It is lower than the simple average of NAVs (harmonic mean effect).

SWP

Units redeemed = withdrawal amount ÷ NAV on that date

Each withdrawal is a redemption. Exit load and capital gains tax can apply.

STP

Redemption from source scheme + purchase in target scheme

Fixed, flexible or capital appreciation variants exist. Load and tax apply on the source scheme redemption.

NACH mandate

One-time signed bank instruction → repeat auto-debit on due dates

Used for SIP collection. The investor can cancel or modify it through the bank or AMC.

CAS

One statement per PAN across all fund houses

Consolidates folios across AMCs. Do not confuse it with the single-AMC account statement.

Escalation order

Entity (distributor / AMC / RTA) → SEBI SCORES → Smart ODR

Start with the entity concerned. Go up only if there is no satisfactory resolution.

SCORES full form

SCORES = SEBI Complaints Redress System

Web-based, centralised, with online tracking of the complaint. Complaint is routed to the entity, which files an action taken report.

SCORES 2.0 resolution timeline

Entity to resolve within 21 days

Under SEBI's SCORES 2.0 framework. Do not confuse with older 30-day timelines.

Smart ODR purpose

Online conciliation → online arbitration

Used after the entity and SCORES route does not give a satisfactory result.

Distributor duty

Receive → forward → follow up → inform

Pass the complaint to the AMC/RTA, track it, and keep the investor informed. Do not ignore or suppress it.

Quick revision

• KYC is required before investing in mutual funds, and a distributor must help the investor complete it correctly.
• Learn the holding modes: single, joint, and anyone-or-survivor. Know who can act in each.
• Nomination is the investor's choice of who receives units on death. Transmission is the process of moving units to the claimant.
• Know the difference between a nominee and a legal heir in transmission cases.
• Transaction rules apply by cut-off time, and the NAV applicable depends on when the request and funds are received.
• A redemption is paid from the scheme, and the investor should know the usual payout timeline in the workbook.
• SIP invests a fixed amount at set intervals, SWP withdraws at set intervals, and STP moves money from one scheme to another.
• Account changes like address, bank details and contact need proper documents and process.
• Complaints go first to the distributor or AMC, then to the RTA or higher forums if unresolved.
• SCORES is SEBI's online platform for lodging and tracking investor complaints.
• Minors need a guardian to operate the account, and special rules apply when the minor turns 18.
• When two options look right, pick the one that follows the stated rule exactly, not the one that seems practical.

Common mistakes

• Thinking Aadhaar is mandatory for mutual fund KYC. Fix: Remember it is one of several allowed methods and needs the investor's consent. Other officially valid documents work.
• Treating KRA KYC and CKYC as the same thing. Fix: KRA is the securities market record. CKYC is a central registry for the whole financial sector with a 14-digit KIN.
• Thinking joint holding lets any one holder sign. Fix: Remember joint means all sign together. Only anyone or survivor lets one sign.
• Allowing a minor to hold units jointly with a parent. Fix: A minor's folio has the minor as the sole holder and the guardian operates it.
• Thinking the nominee becomes the full owner of the units. Fix: Remember the nominee is only authorised to receive the units and holds them for the benefit of the legal heirs, who keep their rights under succession law.
• Giving units to the nominee in a joint folio when one holder dies. Fix: In a joint folio the surviving holder(s) get the units first. The nominee acts only after all holders die.
• Mixing up SWP and STP. Fix: SWP pays out to the investor's bank. STP moves money into another scheme.
• Believing SIP guarantees profit or avoids loss. Fix: It only averages the purchase cost. Returns still depend on the market and the scheme.
• Saying the investor must go to SEBI first. Fix: Remember that the investor first approaches the entity concerned. SCORES comes when that does not resolve it.
• Thinking SEBI itself resolves each complaint on SCORES. Fix: SCORES routes the complaint to the entity concerned, which must respond with an action taken report. SEBI oversees the process.

Exam tips

• Watch the word 'mandatory'. Aadhaar is the usual trap.
• Learn the numbers: PAN has 10 characters and KIN has 14 digits.
• Know which agency holds which record: KRA for securities market, CKYC registry for the whole financial sector.
• Remember that FATCA/CRS is a self-declaration of tax residency, not a KYC document.
• On a 1-mark MCQ, eliminate options that say KYC is needed only above a certain amount.
• Expect scenario questions that state the holding mode and ask who can sign.
• Remember that a folio with more than one holder and no stated mode is treated as joint. This does not apply to a minor's or HUF's folio.
• Link minors to guardians and the status update on becoming major.