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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Fund Distribution and Channel Management Practices

Which of the following is a permitted way for a mutual fund distributor to take an investor's application for units?

A distributor may accept payment instruments drawn in favour of the scheme or the mutual fund, not in the distributor's own name. Collecting investor money into the distributor's personal account or accepting third-party payments without proper declaration is not permitted.

  1. AAccepting a cheque drawn in the distributor's own name and investing it in the investor's name
  2. BAccepting cash of any amount from the investor and depositing it in the distributor's account
  3. CAccepting payment instruments drawn in favour of the scheme or the mutual fund, and not in the distributor's own nameCorrect
  4. DAccepting a cheque from a third party without any KYC or declaration

Explanation

Payments for units must be made in favour of the scheme or mutual fund (via approved instruments or electronic modes), and the distributor must not collect money in their own name. Accepting funds into a distributor's account or third-party funds without declarations is not allowed.

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