NISM V-B Fund Distribution and Channel Management — Practice Questions

1. Sunita retired last year after 26 years as a branch manager with a public sector bank. She has cleared NISM Series V-B and been empanelled as a mutual fund distributor under the new cadre. In her first month three people approach her: a neighbour who wants a liquid fund to park a bonus for six weeks; a former colleague who wants to start a SIP into an index fund for her daughter's education; and a nephew who has read about small-cap funds and wants Sunita to sell him one. A fourth scheme she is considering recommending, a diversified equity fund, has beaten its benchmark in two of the last three years and lagged it in the third. On what basis is Sunita eligible for the new cadre of distributors?

Answer: B — She is a retired bank officer with at least 10 years of service

Why: The new cadre is open to postal agents, retired government and semi-government officials of class III and above with at least 10 years of service, retired bank officers with at least 10 years of service, and other similar persons such as bank correspondents notified by AMFI. Sunita's 26 years in a bank qualify her under the third category; the certification for this cadre is V-B, not V-A.

💡 New cadre = postal agents, retired govt (class III+, 10 yrs), retired BANK officers (10 yrs), notified others.

2. Sunita retired last year after 26 years as a branch manager with a public sector bank. She has cleared NISM Series V-B and been empanelled as a mutual fund distributor under the new cadre. In her first month three people approach her: a neighbour who wants a liquid fund to park a bonus for six weeks; a former colleague who wants to start a SIP into an index fund for her daughter's education; and a nephew who has read about small-cap funds and wants Sunita to sell him one. A fourth scheme she is considering recommending, a diversified equity fund, has beaten its benchmark in two of the last three years and lagged it in the third. Which of the three requests can Sunita NOT fulfil as a new cadre distributor?

Answer: C — The small-cap fund for the nephew

Why: The new cadre may sell only simple and performing schemes: liquid and money market schemes, index schemes, diversified equity schemes, retirement benefit schemes with tax benefits, and fixed maturity plans. A small-cap fund is a concentrated, high-risk category outside that list, so the nephew must be referred to a regular ARN holder.

💡 New cadre sells ONLY: liquid, index, diversified equity, retirement, FMP. Small-cap is OUT.

3. Sunita retired last year after 26 years as a branch manager with a public sector bank. She has cleared NISM Series V-B and been empanelled as a mutual fund distributor under the new cadre. In her first month three people approach her: a neighbour who wants a liquid fund to park a bonus for six weeks; a former colleague who wants to start a SIP into an index fund for her daughter's education; and a nephew who has read about small-cap funds and wants Sunita to sell him one. A fourth scheme she is considering recommending, a diversified equity fund, has beaten its benchmark in two of the last three years and lagged it in the third. The diversified equity fund beat its benchmark in two of the last three years. Does it qualify as a 'performing' scheme for the new cadre?

Answer: C — No — returns must equal or better the benchmark in each of the last three years

Why: The SEBI circular that created the new cadre requires the products they sell to have returns equal to or better than their scheme benchmark during each of the last three years. Lagging the benchmark in any one of those years disqualifies the scheme, however good the other two were.

💡 'Performing' = beats or equals benchmark in EACH of last 3 years, not most.

Practise all 39 Distribution & Channels questions