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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Legal Structure of Mutual Funds in India

Which of the following is a condition that a sponsor must satisfy under SEBI Mutual Fund Regulations to set up a mutual fund?

A sponsor must have a sound track record and at least five years of experience in the financial services business, along with a good reputation and positive net worth. It need not be a bank, hold most units, or act as custodian.

  1. AIt must have a sound track record and be in the financial services business for at least five yearsCorrect
  2. BIt must be a nationalised bank
  3. CIt must hold at least 51% of the units of every scheme launched
  4. DIt must act as the custodian of the fund's securities

Explanation

A sponsor needs a sound track record, general reputation of fairness and integrity, and business experience of at least five years in financial services, with positive net worth in the preceding five years. The other options are not requirements.

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