Investor Services & Transactions

Not automatically. An NFO makes sense only if it offers a genuinely new investment strategy or category not available in existing schemes. If a similar fund with a 5-year track record already exists, the existing fund is usually a better choice because it has a proven performance history. Distributors should avoid the common pitfall of pushing NFOs solely for higher initial commissions.

SEBI requires a minimum subscription of ₹10 crore for open-ended schemes and ₹20 crore for close-ended schemes. If the AMC fails to collect this minimum amount during the NFO period, the entire amount collected must be refunded to investors within 5 business days. The scheme is then considered to have failed and does not launch.

No, SIP cannot be started during the NFO period. SIP can only begin after the scheme reopens for continuous sale and repurchase post-NFO. During the NFO window, only lumpsum investments are accepted.

There is no exit load during the NFO period because redemptions are not allowed until the scheme reopens. For open-ended funds, once the scheme reopens (typically within 5 business days of allotment), the standard exit load structure applies as mentioned in the SID.

The NFO price is the fixed face value (₹10) at which units are offered during the subscription window. NAV (Net Asset Value) is the daily computed per-unit value once the scheme is operational. After the NFO, units are bought and sold at NAV, not face value. A fund with NAV ₹500 is not "expensive" — it simply means the fund has grown over time.

An AMFI-registered distributor can facilitate the KYC process — collecting documents, filling the form, and performing In-Person Verification (IPV), either physically or via video KYC. However, the client must sign the KYC form themselves. Distributors cannot forge or sign on behalf of the client. The IPV privilege is a significant advantage for distributors.

KRA KYC is specific to the securities market (mutual funds, broking, etc.) and is maintained by KYC Registration Agencies like CAMS KRA or KFintech KRA. CKYC is a central registry that covers all financial sectors — banking, insurance, mutual funds, NBFCs — and is maintained by CERSAI. The industry is progressively moving towards CKYC as the unified standard.

If the client has completed CKYC with their bank and has a KIN (KYC Identification Number), they do not need to redo the full KYC process. The AMC/RTA can pull their KYC record from the CKYC registry using the KIN. However, if only KRA KYC was done, it may need to be migrated or re-verified depending on the AMC's requirements.