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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Legal and Regulatory Framework

As per the SEBI (Mutual Funds) Regulations, which of the following is a requirement relating to the sponsor of a mutual fund?

The sponsor must have a sound track record and a reputation for fairness and integrity in its business dealings, along with meeting net worth and profitability conditions. It need not be a bank, and day to day investment management is done by the AMC, not the sponsor.

  1. AThe sponsor must have a sound track record and general reputation of fairness and integrity in all its business transactionsCorrect
  2. BThe sponsor must be a bank licensed by the RBI
  3. CThe sponsor must hold 100 percent of the net worth of the AMC in the form of debt
  4. DThe sponsor must manage the day to day investments of the schemes

Explanation

The sponsor must have a sound track record, reputation of fairness and integrity, and meet profitability and net worth criteria. It need not be a bank. It does not manage investments, which is the AMC's function, and no debt-only holding rule exists.

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