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What is RTA in Mutual Fund?

RTA stands for 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. 

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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 an RTA in Mutual Fund

The primary role of RTAs is to keep track of an 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)
  • Redemption
  • 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:

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. An applicant was eligible for the same day’s net asset value or NAV only when their application was submitted 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.