NISM Series V-D Ch.9: Investor Services — Practice Questions

Q: For any mutual fund transaction (purchase, redemption, switch), regardless of the amount, what is a mandatory identification document for resident Indians?

Permanent Account Number (PAN) Permanent Account Number (PAN) is mandatory for all mutual fund transactions (purchases, redemptions, switches, SIPs, etc.) for resident Indian investors, irrespective of the transaction amount. This is a key requirement for KYC and tax compliance as per SEBI regulations.

Q: Which of the following is NOT a valid ground for a mutual fund to reject an application for purchase of units?

Applicant has previously invested in a different AMC. Having previously invested in a different AMC is not a valid reason to reject an application. Mutual funds operate independently, and an investor is free to invest across various AMCs. Incomplete forms, third-party payments (unless specific exceptions apply), and non-KYC compliance are valid reasons for rejection.

Multiple Choice Questions (50)

Q1MCQEasyApplication Process (PAN)

For any mutual fund transaction (purchase, redemption, switch), regardless of the amount, what is a mandatory identification document for resident Indians?

AAadhaar Card

BPassport

CPermanent Account Number (PAN)

DDriving License

Q2MCQEasyApplication Processing

Which of the following is NOT a valid ground for a mutual fund to reject an application for purchase of units?

AApplication form is incomplete.

BPayment instrument does not match the applicant's name.

CApplicant is not KYC compliant.

DApplicant has previously invested in a different AMC.

Q3MCQHardApplication Rejection Reasons

Under which of the following circumstances is a mutual fund application most likely to be rejected by the AMC/RTA?

AThe application form is filled in blue ink instead of black ink.

BThe applicant submits a self-attested copy of PAN instead of the original for verification.

CThe investment is made using a third-party cheque, and the third party is not a registered guardian or specific permitted relationship.

DThe applicant provides only a mobile number and no landline number.

Q4MCQMediumChange in Investor Details

An investor wishes to change their registered bank account details for their mutual fund investments. Which of the following is typically a mandatory document required for this change?

AA copy of the investor's passport.

BA cancelled cheque leaf of the new bank account with the investor's name pre-printed.

CA utility bill showing the new bank account address.

DA copy of the investor's PAN card.

Q5MCQMediumChange of Details - Bank Mandate

An investor wishes to change their registered bank account details in their mutual fund folio. Which of the following is typically NOT required for this process?

AA cancelled cheque leaf of the new bank account.

BA copy of the passbook or bank statement of the new account.

CA photograph of the investor.

DA duly filled and signed bank mandate change form.

Q6MCQMediumChanges in Investor Details

To update bank account details for a mutual fund folio, which of the following documents is typically NOT required by the RTA?

AA cancelled personalized cheque leaf of the new bank account.

BA copy of the bank passbook or statement showing the new account details.

CA utility bill (e.g., electricity, phone) in the investor's name for the new address.

DA request letter signed by all unitholders in the folio.

Q7MCQEasyCommon Account Number (CAN)

What is the primary purpose of a Common Account Number (CAN) in the mutual fund industry?

ATo track an investor's transactions across different AMCs with a single reference.

BTo consolidate all bank accounts linked to an investor's mutual fund investments.

CTo serve as a unique identifier for distributors to track their clients.

DTo replace the need for PAN for mutual fund investments.

Q8MCQHardConsolidated Account Statement (CAS)

An investor holds mutual fund units in physical form (statement of account) and also has holdings in a dematerialized (demat) account. How frequently will such an investor receive a Consolidated Account Statement (CAS) if there is a transaction in any of their holdings?

AAnnually

BHalf-yearly

CMonthly

DQuarterly

Q9MCQEasyCut-off timings

For investments in Liquid and Overnight funds, to receive the previous day's NAV, what is the latest time by which funds must be available with the AMC?

A3:00 PM on the transaction day.

B1:00 PM on the transaction day.

C2:00 PM on the transaction day.

D1:30 PM on the transaction day.

Q10MCQMediumDemat of Mutual Fund Units

What is the primary benefit of holding mutual fund units in dematerialized (demat) form?

AHigher returns on investment.

BExemption from capital gains tax.

CConsolidation of all financial holdings (shares, mutual funds, etc.) in a single account, reducing paperwork.

DGuaranteed liquidity for all schemes.

Q11MCQMediumDematerialization of Mutual Fund Units

What is a significant advantage of holding mutual fund units in dematerialized (demat) form compared to physical (statement of account) form?

AHigher returns on investment due to reduced costs.

BAbility to pledge units as collateral for loans more easily.

CExemption from capital gains tax.

DLower expense ratio for demat units.

Q12MCQHardFATCA and CRS

Which of the following statements is true regarding the FATCA and CRS requirements for mutual fund investors?

AThey apply only to Non-Resident Indian (NRI) investors.

BThey are primarily for tax reporting to foreign governments and require self-certification from all investors.

CThey are voluntary disclosures and not mandatory for investment.

DThey only apply to institutional investors, not individual investors.

Q13MCQHardFATCA/CRS

An investor fails to submit the FATCA/CRS declaration form along with their mutual fund application. What is the most likely consequence?

AThe application will be rejected outright as incomplete.

BThe application will be processed, but the investor will be restricted from future transactions until the form is submitted.

CThe application will be processed, but the AMC will be required to report the investor's details as 'Undocumented Account' to the tax authorities.

DThe investor's units will be compulsorily redeemed after a specific period if the form is not submitted.

Q14MCQHardFATCA/CRS and PoA

When a Power of Attorney (PoA) holder acts on behalf of an investor for mutual fund transactions, whose FATCA/CRS declaration is typically required?

AOnly the investor's FATCA/CRS declaration is required.

BOnly the PoA holder's FATCA/CRS declaration is required.

CBoth the investor's and the PoA holder's FATCA/CRS declarations are required.

DNeither is required, as PoA transactions are exempt.

Q15MCQHardFATCA/CRS Compliance

What is the primary implication for an investor who fails to provide FATCA/CRS self-certification details to the mutual fund?

ATheir existing investments will be frozen until the details are provided.

BThey will be subject to a higher rate of taxation on their mutual fund gains.

CTheir new investment applications may not be processed or existing accounts may be blocked for further transactions.

DThey will be automatically deemed a US person for tax purposes.

Q16MCQEasyGrievance Redressal

Which platform is provided by SEBI for investors to lodge complaints against market intermediaries, including Asset Management Companies (AMCs)?

AAMFI website

BSCORES

CIRDAI portal

DPFRDA portal

Q17MCQMediumKYC and Anti-Money Laundering (AML) - FATCA/CRS

What is the primary purpose of FATCA and CRS declarations collected from mutual fund investors?

ATo track large value transactions for money laundering prevention.

BTo identify and report tax residencies of investors for international tax compliance.

CTo verify the identity of politically exposed persons (PEPs).

DTo ensure compliance with domestic KYC norms.

Q18MCQEasyKYC Norms and Requirements

What is the primary purpose of Central KYC (CKYC) as mandated by the Government of India?

ATo consolidate all bank account details of an investor into one record.

BTo enable investors to complete KYC formalities only once across all SEBI-registered intermediaries.

CTo track an investor's investment performance across different asset classes.

DTo provide a centralized platform for processing mutual fund transactions.

Q19MCQEasyKYC Requirements

Which of the following is a mandatory pre-requisite for investing in mutual funds as per SEBI regulations?

AA Demat account

BA valid Permanent Account Number (PAN)

CA minimum investment of ₹5,000

DA certified financial advisor

Q20MCQMediumMinor Accounts

For an investment made by a minor through a guardian, what happens to the folio when the minor attains majority?

AThe folio automatically gets frozen until the new KYC is completed.

BThe guardian continues to operate the folio until the minor requests a change.

CThe folio is redeemed, and proceeds are transferred to the guardian.

DThe minor's KYC is updated, and the minor takes over the operation of the folio.

Q21MCQHardMinor Attaining Majority

When a minor unit holder attains majority, what is the mandatory action required from the former minor to continue holding the mutual fund units?

AThe guardian must transfer the units to a new folio opened in the minor's name.

BThe former minor must submit a new KYC application, PAN, and updated bank details, and sign a fresh application form.

CThe fund house automatically converts the folio to an adult folio upon receiving the minor's birth certificate.

DThe units are compulsorily redeemed, and proceeds are paid to the former minor.

Q22MCQMediumMinor Nominee

What is the implication if a nominee designated for a mutual fund folio is a minor at the time of nomination?

AThe nomination is invalid until the minor attains majority.

BAn appointee must be specified to receive the units on behalf of the minor nominee.

CThe minor nominee automatically becomes the sole unit holder upon the original investor's death.

DThe units are held in trust by the AMC until the minor attains majority.

Q23MCQEasyMinor's Account - Attaining Majority

When a minor investor in a mutual fund attains majority, what is the immediate consequence for the operation of their account?

AThe account is automatically frozen until the new KYC is completed.

BThe account continues to operate normally under the guardian's signature.

CThe units are automatically redeemed and proceeds are paid to the erstwhile guardian.

DThe minor can continue to transact using the same KYC details.

Q24MCQMediumMinor's Folio

Upon a minor attaining majority, which of the following is mandatory for the former minor to continue holding the mutual fund units?

AAppoint a new guardian within 3 months.

BOpen a new folio in their own name and transfer the units.

CSubmit fresh KYC documents in their own name and update the bank mandate to an account solely in their name.

DProvide a notarized affidavit stating they have attained majority.

Q25MCQEasyNAV Applicability and Cut-off Times

For a purchase application in an equity-oriented mutual fund scheme, what is the cut-off time for the applicability of the same day's NAV?

A1:00 PM

B2:00 PM

C3:00 PM

D4:00 PM

Q26MCQEasyNomination

How many nominees can a mutual fund investor appoint for a single folio?

AOne

BTwo

CThree

DAny number, subject to AMC approval

Q27MCQMediumNomination and Transmission

In the absence of a nomination, how are the units of a deceased sole unitholder in a mutual fund scheme typically settled?

AThe units are transferred to the AMC's investor protection fund.

BThe units are held in abeyance until a claim is made by a legal heir.

CThe units are transferred to the surviving joint holder, if any.

DThe units are transmitted to the legal heirs upon submission of required legal documents like a Will or Succession Certificate.

Q28MCQEasyNomination Facility

Which of the following persons can be appointed as a nominee for mutual fund units?

AAny individual, including a minor.

BOnly adult family members.

COnly a bank or financial institution.

DOnly the joint holder of the units.

Q29MCQHardNomination for Minors

What happens to the nomination made by an investor if the nominee is a minor and attains majority before the death of the unit holder?

AThe nomination automatically becomes void.

BThe nomination remains valid, and the minor, now major, receives the units.

CThe unit holder must re-nominate the individual as an adult.

DThe guardian appointed for the minor nominee automatically becomes the new nominee.

Q30MCQHardNomination rules and rejections

Under which specific circumstance can a validly submitted nomination by an investor in a mutual fund be rejected by the AMC/RTA?

AIf the nominee is a minor and no guardian is appointed.

BIf the investor has invested less than ₹5,000.

CIf the nominee is a non-individual entity (e.g., a trust or company).

DIf the nomination form is not witnessed by a notary public.

Q31MCQEasyOther Investor Services - CSCs

What is the primary role of Common Service Centres (CSCs) in the context of mutual fund investments in rural areas?

ATo provide financial advisory services and recommend specific mutual fund schemes.

BTo act as official points of acceptance for mutual fund transactions and facilitate investor services.

CTo manage investment portfolios for rural investors on a commission basis.

DTo offer loans against mutual fund units to rural investors.

Q32MCQHardPAN Requirement and Exemptions

Under which of the following circumstances can an investor invest in a mutual fund without a PAN?

AIf the investor is a minor and the investment amount is below a specified limit.

BIf the investor is a Senior Citizen and invests through a micro-SIP.

CIf the investor is a Non-Resident Indian (NRI) with an OCI card.

DPAN is mandatory for all mutual fund investments, irrespective of the investor type or amount.

Q33MCQMediumPayment Methods and KYC

For transactions involving purchase of mutual fund units up to Rs. 50,000, what is the maximum value of cash that can be accepted by an AMC, provided the investor has completed KYC?

ARs. 10,000 per investor per financial year

BRs. 20,000 per investor per financial year

CRs. 50,000 per investor per financial year

DCash payments are not allowed for mutual fund purchases.

Q34MCQMediumPledging of Units

Which of the following statements regarding the pledging of mutual fund units is TRUE?

AAll types of mutual fund units can be pledged, irrespective of their holding form.

BOnly units held in dematerialized form can be pledged.

CPledging of mutual fund units is not permitted as per SEBI regulations.

DUnits held in physical form can be pledged by submitting the original Statement of Account to the lender.

Q35MCQEasyPMLA Compliance

The Prevention of Money Laundering Act (PMLA) requires mutual funds to collect which of the following information from investors?

ADetails of their political affiliations.

BSource of funds.

CEducational qualifications.

DMarital status.

Q36MCQEasyPower of Attorney (POA)

What is the main function of a Power of Attorney (POA) holder in the context of mutual fund investments?

ATo transfer units to their own name without the investor's consent

BTo act as a nominee for the units upon the investor's death

CTo execute transactions and make decisions on behalf of the original investor as per the POA terms

DTo become a joint holder in the mutual fund folio automatically

Q37MCQMediumRedemption Process - Tax Implications

What is the significance of the 'First-in, First-out (FIFO)' principle in mutual fund unit allocation, particularly for capital gains calculation?

AIt determines the order in which redemption requests are processed by the AMC.

BIt dictates that the oldest units purchased are considered sold first for tax computation.

CIt ensures that units bought at the highest NAV are redeemed first.

DIt determines the order of dividend payout to unitholders.

Q38MCQHardRedemption Suspension

Which of the following is a permissible reason for an AMC to temporarily suspend redemption requests in a mutual fund scheme?

ATo prevent investors from exiting during a market downturn.

BWhen there are insufficient funds due to large-scale redemptions, especially in illiquid assets.

CTo ensure the fund manager can buy more units at lower prices.

DTo penalize investors who frequently redeem their units.

Q39MCQEasyStatement of Account

What is the primary purpose of a Consolidated Account Statement (CAS) provided to mutual fund investors?

ATo provide details of tax liabilities on capital gains.

BTo offer a single view of all holdings across different AMCs and depositories.

CTo list all transactions for a specific fund scheme in a financial year.

DTo detail the fund manager's investment strategy and performance.

Q40MCQMediumSystematic Transfer Plan (STP)

An investor initiates an STP from an equity fund to a debt fund. What is a key characteristic of this transaction?

AUnits are redeemed from the equity fund at the prevailing NAV and new units are purchased in the debt fund at the same day's NAV.

BIt involves a simultaneous redemption from one scheme and a purchase into another, typically on a periodic basis.

CIt is typically used to book profits from a debt fund and transfer them to an equity fund.

DThe capital gains/losses from the equity fund are deferred until the final redemption from the debt fund.

Q41MCQMediumThird-Party Payments

Under which of the following circumstances is a third-party payment generally permitted for mutual fund investments?

AInvestment made by an individual on behalf of a friend for convenience.

BGift made by a specified relative (e.g., parent, spouse, sibling) to the investor.

CPayment made by a financial advisor on behalf of their client.

DPayment made by a corporate entity on behalf of an unrelated individual.

Q42MCQMediumTransaction Processing - Cut-off Timings

For a purchase application in an equity-oriented mutual fund scheme to receive the NAV of the same business day, the application money should be received by the AMC/RTA and be available for utilization before:

A1:00 PM

B2:00 PM

C3:00 PM

D4:00 PM

Q43MCQMediumTransaction Types (STP/Switch)

An investor wants to regularly move a fixed amount from an equity fund to a debt fund at specific intervals (e.g., monthly). Which type of transaction is most suitable for this purpose?

ALumpsum purchase

BRedemption

CSwitch

DSystematic Transfer Plan (STP)

Q44MCQMediumTransactions

For investments in liquid funds, what is the typical cut-off time for receiving same-day Net Asset Value (NAV) for purchase applications, provided the funds are available for utilization by the AMC?

A1:00 PM

B2:00 PM

C3:00 PM

D4:00 PM

Q45MCQEasyTransactions - Switch

What is the primary objective of a 'Switch' transaction in mutual funds?

ATo change the dividend payout option of an existing investment.

BTo transfer units from one folio to another within the same scheme.

CTo redeem units from one scheme and invest the proceeds into another scheme of the same mutual fund.

DTo pledge mutual fund units as collateral for a loan.

Q46MCQMediumTransmission

In the event of the death of a sole unitholder, what is the most critical document required for the transmission of units to the nominee?

AOriginal purchase application form of the deceased.

BDeath certificate of the deceased.

CIncome tax returns of the deceased for the last 3 years.

DProof of identity of the deceased.

Q47MCQHardTransmission of Units (Nomination)

In the event of the death of the sole unitholder, which of the following documents is generally NOT required for the transmission of units to the nominee?

AOriginal/attested copy of the death certificate of the deceased unitholder.

BKYC acknowledgement of the nominee.

CProof of relationship of the nominee with the deceased.

DNo Objection Certificate (NOC) from all legal heirs other than the nominee.

Q48MCQEasyTypes of Transactions (Switch)

What does a 'Switch' transaction in mutual funds involve?

ATransferring units from one scheme to another within the same fund house

BTransferring units from one fund house to another

CChanging the investment option (e.g., Growth to Dividend) within the same scheme

DSelling units and reinvesting the proceeds in the same scheme

Q49MCQEasyUnclaimed Amounts

As per SEBI regulations, what happens to unclaimed redemption amounts or dividends in a mutual fund scheme?

AThey are forfeited by the AMC after a specific period

BThey are invested in a separate scheme and continue to earn returns until claimed

CThey are transferred to the Prime Minister's Relief Fund

DThey are returned to the last known bank account of the investor

Q50MCQEasyUnclaimed Dividends/Redemption

What is the minimum period after which unclaimed redemption/dividend amounts in a mutual fund must be compulsorily deployed in a separate scheme or plan?

A3 months

B6 months

C1 year

D3 years

About this content: These practice questions are based on the NISM-Series-VD: Mutual Fund - Specialised Investment Fund Distributors Certification Examination Workbook published by the National Institute of Securities Markets (NISM), Mumbai (March 2026 edition). NISM is a SEBI-established institution. Questions cover Chapter 9: Investor Services with verified answers and explanations. BullWiser is an independent exam preparation platform — not affiliated with NISM, SEBI or AMFI. Last updated: July 24, 2026.

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