NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Legal Structure of Mutual Funds in India
Which of the following functions is performed by the custodian of a mutual fund?
The custodian safeguards the securities held by the mutual fund schemes and handles the physical or electronic delivery and receipt of securities when trades are settled. It does not approve advertisements, set NAV times or appoint AMC directors, which are other parties' roles.
- AFixing the NAV declaration time for all schemes
- BSafekeeping of the securities of the schemes and settlement of securities transactionsCorrect
- CApproving the advertisements issued by the AMC
- DAppointing the directors of the AMC
Explanation
The custodian holds the securities of the schemes in safekeeping and handles delivery and receipt in securities transactions, often also in dematerialised form. Approving advertisements and monitoring the AMC are trustee responsibilities, and AMC directors are not appointed by the custodian.
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