1. Reference: SEBI circular on option to hold units in demat form - Circular no: CIR/IMD/DF/9/2011 dated 19th May 2011 and subsequent clarification received on 29th Sep 2011 : IMD/30962/2011
2. Effective date : 01st October 2011 for Subscriptions (New, Additional and NFO) of all schemes with ISINs & 01st January 2012 for SIP
3. Objective of the circular: It has been observed that in close ended schemes, many mutual funds provide an option to hold units either in physical or in demat form, but offer no such option in case of open ended schemes. In order to facilitate investors, Mutual Funds should provide an option to the investors to receive allotment of Mutual Fund units in their demat account while subscribing to any scheme (open ended/close ended/Interval). Therefore Mutual Funds/AMCs are advised to invariably provide an option to the investors to mention demat account details in the subscription/transaction form, in case they desire to hold units in demat form
4. Scope of the circular:
a. Transactions allowed: Subscriptions (NFO, New, Additional and SIP) of all schemes (including liquid schemes – growth & dividend payout plan)
b. Transactions not in scope presently :
i. Switch
ii. SWP (Systematic Withdrawal)
iii. STP (Systematic transfer)
iv. Dividend Reinvestment (daily, weekly & fortnightly)
v. Variable Investment/Transfer Plans
5. Process change & action points:
# / Process steps / Input dependencies / Remarks1 / Reporting of applications from Investor Service Centers / AMCs to make the provision for the following fields in the application form: with statement as- “If you wish to receive units in your demat account, please provide your demat account either NSDL or CDSL” with NO Yes/No option
ü Client ID
ü DP ID / There is no change in the application acceptance or reporting process.
AMCs to include instructions in the application form to investors for providing the relevant information along with Client Master List (CML) from depository and any other proof of his DMAT a/c
2 / Data capture & DTR – There is no Change in data entry of all the fields as per application form.
Additionally DP/Client ID is also captured and this facility is already available / AMCs to request investors whoever wants their unit to be converted in to Demat to enclose Client Master List (CML) which should not be later than one month old / DTR report will have DP/Client ID where ever provided/captured from application
3 / Allotment process – It will remain same as present on T Day and confirmations of allotment would go as usual where email id/mobile number is registered / AMCs shall ensure that all schemes are registered with NSDL/CDSL to obtain ISIN Numbers (at Scheme / Plan / Option Level ) and publish in application forms (SAI) / No change in the current process and confirmation letter / SOA indicating the allotment of units will be sent to investor, where email id/mobile number is not registered.
4 / DP/Client ID validation & update with flag ‘Y’ for valid cases -
System will generate a text file ( with ISIN / DPID / CLIENT ID ) for Demat Account Validation / On T + 1, the DP/Client ID is sent to NSDL / CDSL for validation and reverse feed.
In case investor provides CML along with application form, first level verification is with given CML for order of names
If Demat account is found invalid Karvy will send PAN to CVL for KYC verification, till common KRA process is finalised for new registrations / Only those transactions which are flagged as ’Y’ will be eligible for executing corporate action, with multiple dates of allotment
If Demat account is found invalid or order of names differ, investor continues to hold the units in physical mode
5 / Cheque clearance status / remittance confirmation / Receipt of Cheque level data from banks / Updating the Cheque cleared/remittance status will be done by banking team on a daily basis
6 / Corporate Action (CA) to DPs / CA doc file will be generated and send to AMCs for submitting with DPs
File for execution will be uploaded to depository system on submission of CA form / The credit will be given to investor Demat account with respective DPs on execution
Executions will be on weekly basis for funds realised transactions
7 / Confirmation to investors –
Confirmation letter will be generated and send to investors / For all invalid DP/Client ID accounts, statement of account will be send along with a letter giving the rejection reason for units not given into his/her Demat A/c
These investors will continue to hold the units in physical form and get normal statement of account.
8 / Future confirmations for units converted in to Demat / DPs will send the unit balances / confirmations to investors as per their agreed service standards
They will not form part of Monthly CAS thereafter / No statement of account will be generated by Karvy and all those folios will be blocked for generation of statement of account in future
9 / Change requests / Investor has to approach his /her DP for all change request updates /holding statements / Karvy will not accept any change requests from investors
10 / Unit capital report / There is no change in the process
6. Redemption process:
a. Process at Depository Participant & Depository:
1. Investor should approach DP for redemption of units, which are in demat form
2. Duly filled in and signed (by all the holders) Repurchase Request Form [RRN] shall be submitted with DP directly, giving such units held in Demat for redemption
3. DP will check the information filled in the RRF with enclosure and if found valid in all respects including their signatures, will give an acknowledgement copy of RRF duly signed and stamped, retaining the other for their record.
4. Details are entered in DP local system and register the request. An electronic number gets generated [RRN] automatically in the system with date and time of request registered.
5. Once RRN is generated, investor will not have access to units opted for redemption.
6. DP will release the RRN request electronically to NSDL/CDSL central system, with electronic date/time generated in his system automatically for identifying the cut off time and applicability of NAV.
7. KARVY downloads such electronic files directly from NSDL/CDSL after the cut-off time i.e. 3.00 pm as applicable to Mutual Funds. The electronic file will have the entire unit holder profile including name/Joint holder(s) name / units / date-time / address / bank mandate / account type etc.,
8. This is ONE single file across all funds serviced by KARVY that gets downloaded from NSDL & CDSL.
9. The physical request submitted at DP is NOT required to be sent to KARVY for redemptions and will be retained by DP.
10. Investor cannot submit redemption request at any of KARVY or AMC ISCs for the units held in demat form. AMCs shall include this point as a “disclaimer” in addendum.
11. Alternatively if such scheme is available on MFSS/StAR platforms, investor can place redemption request thru his broker if registered on either platforms, by delivering the units from his Demat account to brokers Demat account.
b. Process at R & T after downloading of Redemption electronic file:
12. KARVY uploads the electronic redemption request file into back office process system.
13. Respective MF units will be port the file to ensure that, these get into process queue for daily transaction processing.
14. These transactions will form part of daily DTR along with all other transactions with branch code - DP88.
15. KARVY will do auto validation with DP/Client ID, while porting takes place for unit position and allow for redemption at ISIN Level (Scheme Option level).
16. If all the details match with the records available at DP, RRN gets processed and endorsed with applicable NAV as per date/time in the electronic file.
17. Generate reverse confirmation file for uploading to depository system for all RRNs from respective business units and submit to DP Registrar for uploading to NSDL / CDSL.
18. On uploading and execution, units locked for redemption get unlocked /extinguished from respective investors DMAT account in case of rejections
19. Proceeds are paid directly to investors account as per the existing TATs and mode of payment will part of regular funding for payout.
20. Karvy generate letters and send as confirmation to investors, providing the details of proceeds paid with mode of payment and other information.
21. Incase of any rejections, such communication to investor will be sent with a copy to DP for information with same rejection reason as available in RRN rejection file
22. All the transactions with corresponding information will get permanently stored in the system for future reference with RRN.
c. Rejection reasons with codes as given by Depository:
NSDL Rejections Reasons / CDSL Rejection ReasonsDescription / Rejection Code / Description / Rejection Code
Signature Mismatch / 1 / ü Stop transfer / 11
Signature of the 1st/2nd/3rd holder(s) not present / 2 / Statement of Account not received with MF-CRF / 12
Rejection due ACA / 3 / De-Stat request initiated under wrong MF ISIN / 13
Units already in demat form / 4 / MF Units not admitted / 14
Incorrect holder(s) name / pattern / 5 / Separate MF-CRFs required for separate KARVY / 15
Unit statement details mismatch / 6 / Mismatch in the electronic and physical details / 16
CRF sent to incorrect registrar / 7 / Document not received within 21 days / 17
Unit statement(s) not received within 21 days / 8 / Transposition-cum destatementization not allowed / 18
NSDL Rejections Reasons / NSDL Rejections Reasons
Description / Rejection Code / Description / Rejection Code
Court injunction pending / 9 / Transmission-cum-destatementization not allowed / 19
Conv. Of units request initiated under wrong ISIN / 10 / Signature mismatch / 21
Units received not available for conversion / 11 / Signature of 1st/2nd/3rd holder not present / 22
Mismatch between unit qty received & CRF qty / 12 / Qty received and CRF qty mismatch / 23
KARVY Unit stmt recd instead of AMC Unit stmt / 13 / Incorrect holder(s) name / pattern / 30
Transposition form not submitted / 14 / CRF sent to incorrect Registrar / 32
Transmission form/Death certificate not submitted / 15 / Court injunction pending / 34
Investor request for rejection and a/c closure / 16 / Rejected due to ACA / 38
ü Units under lien / stop transfer / 17 / Investor requested for rejection & account closure / 42
Changes in DP ID/Client ID or CRF not authorized / 18 / CRF not signed / stamped by DP / 46
Mismatch of DP ID/ Client ID on CRF / 19 / ü Others / 99
CRF not signed / stamped by DP / 20
Miscellaneous / 21
ü Requested units are already redeemed / 22
Unit statement not enclosed with CRF / 23
23. KARVY Downloads Electronic requests received from NSDL/CDSL on daily basis and uploads at common location for processing at respective business units (BU) from the facility given in front end application
24. Receive soft copies from BU for RRN processed and upload back for reverse confirmation to NSDL/CDSL in the given file format for confirmations and rejections if any with reasons thereof.
25. On execution of the above file to NSDL/CDSL, for debit to respective client demat accounts with various other DPs units get extinguished in individual holders accounts in DP system
26. Sending reminders to BU if any RRNs are pending for greater than 3 days as per MF TATs.
Corporate Actions Forms
7. Corporate Actions Form from NSDL To be printed/typed on Issuer’s letter head
CORPORATE ACTION INFORMATION FORM
(For Units - New Fund Offer (NFO) and Further Allotment)
Ref. No.: ______Date: ______
National Securities Depository Limited
Trade World, A Wing
Kamala Mills Compound, Lower Parel
Mumbai – 400013
We wish to execute corporate action to CREDIT the following units to the account(s) in NSDL. The details of the units
allotted are given below:
Issuer Name / ______MUTUAL FUNDCorporate Action Description (eg: NFO, Further allotment) / FURTHER ALLOTMENT
Date of allotment / As per Annexure I enclosed
Names of all stock exchanges where the units are listed / Not listed on any Stock Exchange
I, ______(person name), ______(designation) of
______(issuer name) declare that:
(i) These units are listed on stock exchanges (applicable where original units are listed); and
(ii) The issuer has obtained all the necessary approvals for the aforesaid issue of units.
Authorized Signatory: Date :
Signature
ANNEXURE I FOR CORPORATION ACTION
S.No. / ISIN / ISIN description / Face value / NSDL / CDSL / Date of AllotmentNo. of records / Qty / No. of records / Qty
1 / INF____
2 / INF____
3 / INF____
TOTAL
Notes:
1. / Ensure that the following documents are submitted to NSDL at least by 2.00 p.m. on the date on which the Issuer/ RTAwishes to release the CA file to NSDL.
2. / The form should be signed by the Company Secretary / Managing Director / authorized signatory appointed by the
Board of Directors
3. / After submitting the Corporate Action Information Form and payment of fees to NSDL (as applicable), you may advise
your R & T Agent / Registry Division to execute the corporate action.
4. / Use of separate forms for different allotment dates is not required, can enclose Annexure I as per table given above
8. Corporate Actions Form from CDSL To be printed/typed on Issuer’s letter head
CORPORATE ACTION INFORMATION FORM
(For Units - New Fund Offer (NFO) and Further Allotment)
Ref. No.: Date:______
The Vice President -Operations
Central Depository Services (India) Limited.
16th Floor, P. J. Towers,
Dalal Street, Fort,
Mumbai - 400 001
We wish to execute corporate action to CREDIT the following units to the account(s) in CDSL. The details of the units
allotted are given below:
Issuer Name / ______MUTUAL FUNDCorporate Action Description (eg: NFO, Further allotment) / FURTHER ALLOTMENT
Date of allotment / As per Annexure I enclosed
Names of all stock exchanges where the units are listed / Not listed on any Stock Exchange
I, ______(person name), ______(designation) of