A reader wrote to us with the following query.
If an investor wants to invest Rs.6 lakh in a day in three different schemes, will it be considered retail investment eligible for B30 trail benefit?
Patiala IFA, Rajinder Gupta
SEBI rules say that retail investors are those who invest up to Rs.2 lakh per transaction. “It has been decided inflows of amount up to Rs.2 lakh per transaction, by individual investors shall be considered as inflows from retail investors,” the guidelines state.
Also, AMCs can charge additional 30 bps applicable on B30 cities only on assets from retail investors. Simply put, you would get additional benefits only if the assets in B30 cities come from retail investors.
To answer your query, SEBI rules in the current form does not imply consolidation at fund level or PAN level. Simply put, investment will be considered as retail or non-retail based on transaction size.
In your case, you have given a hypothetical situation in which an investor wants to invest Rs.6 lakh in a day by staggering his investments into three parts. In such a situation, each transaction will be considered as retail transaction even if your client invests in the same scheme three times as RTAs would treat each transaction separately. There will be no consolidation at fund or PAN level.
However, to see if the transaction is in a B30 city, you will have to check AMFI list of top 30 (T30) cities along with their pin codes. AMFI has identified a little over 1,500 such pin codes. Click here to see the list of T30 cities with their pin codes.
If your pin code is not present in this list, your city is B30 subject to fulfilment of certain requirements. For instance, the new norms say that transactions with missing or invalid pin code are considered as T30 transaction from April 1, 2019. Also, in order to get their B30 incentives, distributors have to ensure that the pin codes given in MF folios match with those in the KYC form.
Currently, irrespective of location, most distributors recommend their clients to invest up to Rs.2 lakh to avail of same day NAV.
Note: We have written this article based on the inputs from industry experts and operational heads of a few fund houses and RTAs. Our intention here is to clarify your doubts. This does not tantamount to an advice or a recommendation. Please seek advice from a qualified professional for your guidance.
