What is RTA (Registrar and Transfer Agents) in Mutual Fund?
The full form of RTA is Registrar and Transfer Agents. These are firms registered with the Securities and Exchange Board of India (SEBI). RTAs facilitate record maintenance in mutual fund companies. They act as a single-window reference for the investors. As a result, they can collect all mutual fund investment-related information from RTAs.
A registrar and transfer agent (RTA) acts as a mediator or agent between investors and mutual fund houses. These financial institutions hire RTAs for managing and maintaining proper records of investors’ data. R&T Agents maintain proper records of essential investor data such as account balances and transactions.
SAG RTA, 3i Infotech Ltd., CAMS (Computer Age Management Services), and Karvy are some popular RTA companies in India. They offer RTA services to financial institutions, mutual fund companies, and investors.
Role of a Registrar and Transfer Agent (RTA) in Mutual Fund
The primary role of RTAs is to keep track of investors’ transactions in mutual funds. These include different types of investor transactions such as buying, redeeming, and switching in or out of an investment. They also help individuals to change bank mandates and update their personal information. RTAs are equipped with professional skills for the maintenance of investor and AMC data. All transactions of an investor are maintained by one organization. Even though the investment may have been done with multiple AMCs. Most RTAs have a wide network across the country. Their services are also available online.
Services Offered by Registrar and Transfer Agents
Registrars and transfer agents offer their services to both AMCs and investors.
To Mutual Fund Investors
Investment and transactions: RTAs offer their services through portals. Their platform enables investors to transact with mutual fund companies. You can invest in NFO or transact with a registered MF company through an RTA.
Statement Generation: An R&T agent generates different types of statements such as CAS, portfolio valuation statements, transaction details of a single folio, and gains statements. An investor can study these statements to review their mutual fund portfolio.
An investor can also place the following service requests with an RTA, such as:
- Cancellation or stoppage request of an ongoing SIP, STP or SWP
- Change in bank mandate
- Consolidation of all investor folios under a single folio
- Nomination form
- Updation of records of a minor to major for an individual (change in the guardian, tax details, update investor name)
- CKYC (Central Know Your Customer) forms and a few others are examples of service requests.
To AIF Investors
RTAs provide the following services to AIFs and PMS:
- Investor servicing
- Fund accounting
- Value-added services
- Pre-launch support
- Document management services
- Knowledge and technology partner
To Mutual Fund Distributors
RTA also offer their services to MF distributors. They help the distributor buy and sell funds on the investor’s behalf. MF distributors submit online application forms (scanned copy prepared through a scanner installed in the agent’s office). Their agents no longer need to physically reach the R&T’s office by 3 PM. Earlier, 3 PM was the cut-off time to submit an investment application. The same day’s NAV is applicable only when the investor submits their application before the cut-off time.
Agents also generate a report of sales done by them in a specified duration. The details can be pulled for any frequency as needed such as monthly, quarterly, or yearly. A distributor can punch in his requirements on the R&T’s website to get the reports.
RTAs have recently also started processing Know-Your-Customer (KYC) forms for investors. Similarly, they also process Know-Your-Distributor forms for distributors. Some RTAs such as CAMS service insurance companies too.
To Mutual Fund Companies
RTAs have a nationwide network which has also helped fund houses to reduce costs. They have set up offices across many locations of India, which means fund houses don’t need to open branches in these places.
RTAs provide electronic communication such as account statements, newsletters, or other essential communication from the AMC. They convey the important details to investors and distributors.
RTA charges the fund houses for their services. This cost is eventually passed on to the investor as a part of the annual cost charged by MF houses. The cost for equity funds is about 10 basis points (bps). One bps here is equal to one-hundredth of a percentage point. It is around 5-7 bps for debt funds and about 3-4 bps for liquid funds.
Frequently Asked Questions
Alternate Investment Fund (AIF) is a privately pooled investment fund. AIFs pool money from domestic and foreign investors. It is not regulated by SEBI. AIFs are for sophisticated private investors since they have a high ticket size. The minimum investment amount is high, and the fund’s investment strategy can be aggressive thus AIFs have a high risk.
Portfolio Management Services (PMS) are similar to mutual funds; however, they are quite different. Unlike mutual funds, PMS is more customised. You will have ownership of stocks. The PMS manager will customise the weightage of stocks in the portfolio as per your requirement.
Transfer agents maintain a record of ownership of an issuer’s registered shareholders. They are responsible for maintaining the personal information, investor records and ownership transfer records. On the other hand, a custodian is a broker who maintains their own records of shareholders registered under their name.
A registrar is a company that maintains the records of mutual fund investors. It records an investor’s personal and contact details. Furthermore, the registrar company is responsible for updating the records, issuing and dispatching account statements, and processing transactions for the investor.
On the other hand, a transfer agent is a company that handles the transfer of ownership of mutual fund units. The transfer agent maintains the records of the ownership of the mutual fund units. Furthermore, they handle issues and redemption of mutual fund units. They also update the investor ownership records and process all transactions where ownership transfer happens.