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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 permitted activity of an AMC of a mutual fund, subject to SEBI conditions?

An AMC may offer portfolio management services and manage alternative investment funds if SEBI conditions are met and conflicts of interest are avoided. It cannot accept public deposits or lend like a bank, and underwriting of group securities is tightly restricted.

  1. AManaging portfolios under PMS and acting as investment manager to AIFs, with safeguards against conflict of interestCorrect
  2. BAccepting deposits from the public like a bank
  3. CLending money directly to retail borrowers
  4. DUnderwriting the securities of the sponsor's group companies without limit

Explanation

SEBI allows an AMC to undertake activities such as portfolio management services and managing AIFs, provided there is no conflict of interest and the activities are ring-fenced. Accepting deposits and lending are not permitted for an AMC. Unlimited underwriting of group securities is not allowed.

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