Association of Mutual Funds in India (AMFI’s) Operations Committee has revised the process to be followed for generating AUM by geography report for registrar and transfer agents (RTAs) and fund houses. From April 1, 2018, inflows from beyond (B30) cities are eligible for the extra 30 basis incentive instead of top (T15) cities earlier. As on February 2019, 15% or Rs 3.66 lakh crore of industry’s assets came from B30 locations. Around 64% of assets from B30 locations are in equity funds.
The RTAs were following a standard practice for tagging transactions as T30/B30 from April 2018. However, SEBI observed that the process followed by certain RTAs for tagging B30 transactions where the investors Pin code and city names were missing had certain lacunae.
To ensure B30 transactions are tagged correctly, AMFI has urged distributors to review the PIN codes captured against their client folios and remediate the folios where city and PIN codes are missing. AMFI said that distributors need to ensure that their clients provide the correct PIN codes in Know Your Customer (KYC) and account opening forms. Transactions were pin codes and city names are missing will be considered as T30 transactions.
Here is the standard procedure for tagging transactions:
- The report on AUM by geography as well as tagging T30/B30 transactions should be based on investors PIN code.
- RTAs will have to use the city wise PIN code file for top 200 cities provided by AMFI to tag all purchase transactions (including switches, SIP/STP, and dividend reinvestments) for generating the AUM by geography report.
- All NRI transactions (where tax status code is NRI, OCI, PIO, FIIs, QFI) should be tagged as T30 and shown in the AUM by geography report separately.
- Transactions where country name is mentioned other than ‘India’ should be tagged as T30.
- If the investor PIN code is available and valid as per All-India Pin cod master of Department of Posts, but does not match with AMFI’s T30 Pin code: a) If the city name is available in KYC city field and matches with T30 city list or is a foreign city, the same will be tagged as T30, else the same will be tagged as B30 b ) If the city name is not available in KYC city field, the same will be tagged as B30.
- Where Pin code is invalid or not available: a) If the city name can be positively identified as B30, it will be tagged as B30, else T 30.
- Wherever fresh purchase application is accompanied with KYC form, Pin code/city name as per KYC form should be considered.
- Re-tagging should be done within 15 business days, if the original tagging was done based on fresh purchase application form and KRA/CKYC download indicates a change requirement. The date of tagging/re-tagging of transactions will be stored in the database for audit trail purpose.
- Pin code or investor address received through stock exchange (non-demat)/channel partner feed for transactions, other than fresh purchase can be ignored and RTAs should go by address as per KYC.
- The pin code master and T30/foreign and T30 foreign city master list will be reviewed by AMFI for any changes/correction in coordination with RTAs once a year.
- If any AMC/RTA discovers that any Pin code should be included in T30/B30 city list, they should report the same to AMFI. After reviewing, AMFI will provide a revised list of cities. All revisions will be applied prospectively.
- Any Pin code to be inserted/deleted in the T30/B30 list, will be advised by AMFI. AMCs should instruct RTAs not to make any changes in T30 Pin code list provided by AMFI and RTAs should strictly adhere to the process. Any changes requested to move Pin codes between B30 and T30 should be centralized via AMFI and implemented in a standard manner across all RTAs only if AMFI instructs to do so.
The circular can be accessed here.
