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

Which statement about the sponsor of a mutual fund in India is correct under the SEBI (Mutual Funds) Regulations?

The sponsor must have a sound track record and a reputation for fairness and integrity in all business dealings. Sponsors may be of various types, so no restriction to banks or foreign entities exists, and daily NAV declaration is handled by the AMC, not the sponsor.

  1. AThe sponsor must have a sound track record and a general reputation of fairness and integrity in all its business transactionsCorrect
  2. BThe sponsor must be a public sector bank
  3. CThe sponsor is responsible for the daily NAV declaration of each scheme
  4. DThe sponsor must be a foreign entity with an Indian subsidiary

Explanation

A sponsor must have a sound track record, with integrity and fairness, along with business experience and net worth criteria. Sponsors can be banks, companies or foreign entities, and there is no such restriction. NAV computation is an AMC function, not the sponsor's.

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