10.4 Allotment of Units and Account Statements

Allotment

Units are allotted once two conditions are satisfied:

1. The application is received at an Official Point of Acceptance within the applicable cut-off time, and
2. The funds are realised and available for utilisation by the scheme

The applicable NAV then determines how many units are issued.

Units allotted = (Amount invested - stamp duty) / Applicable NAV

Worked example. INR 75,000 invested, applicable NAV INR 62.4820.

Stamp duty     = 0.005% of 75,000 = INR 3.75
Net investible = 75,000 - 3.75    = INR 74,996.25
Units allotted = 74,996.25 / 62.4820 = 1,200.29 units

Units are allotted in fractions, generally up to three or four decimal places. This is what allows a fixed rupee amount to be invested exactly, and is why a SIP of INR 5,000 buys a different fractional quantity each month. Investors sometimes ask to be allotted whole units; that is not how the arrangement works, because the investment is denominated in rupees rather than in units.

Confirmation of Allotment

The allotment confirmation states the units allotted, the NAV applied, the amount invested and the folio number. Investors should check the NAV applied against the date they expected — a mismatch usually means the funds were realised on a later day, and that is the point at which a query is worth raising.

Account Statements

The Consolidated Account Statement (CAS) consolidates across all mutual funds linked to the investor's PAN, not just one fund house.

• A monthly CAS is issued to investors who transacted during that month.
• A half-yearly CAS covers all folios and carries the disclosures of actual commission paid to the distributor in rupees and the expense ratios of both plans.
• Where units are held in dematerialised form, the CAS is issued by the depository and covers other securities alongside mutual fund units.
• Investors who have not provided a PAN receive folio-level account statements from each AMC instead of a consolidated statement.

Payment Timelines

These are precise, recently tightened, and heavily examined.

These replaced far more generous earlier timelines — redemption proceeds previously took up to ten working days and distributions up to thirty days without penalty. The penal interest obligation is what gives the current timelines force: an AMC that pays late must compensate the investor at 15% per annum for the delay, automatically and without the investor having to ask.

A distributor should know these numbers because "where is my money?" is among the most common investor queries, and the answer depends on whether the timeline has actually been breached.

Payment Mechanics

• Proceeds are credited electronically to the registered bank account of the first unitholder.
• The bank account must be registered in the folio, and a bank change request has its own processing time and verification.
• Payment to a third party account is not permitted; proceeds go only to the unitholder.
• Where bank details are incorrect or the mandate has failed, the credit is rejected and reissued after correction, which is the commonest cause of an apparent delay.

A great many "delayed redemption" complaints turn out to be stale bank details in the folio. A distributor who ensures bank mandates are current prevents the problem rather than chasing it.

Freezing and Restrictions

Allotment and redemption may be restricted where:

• KYC status is on hold or incomplete
• A lien or pledge is marked on the units
• The folio is frozen pending documentation, for example where a minor has attained majority
• Statutory or regulatory attachment applies

In each case the restriction is on the folio rather than on the scheme, and it is resolved by completing the documentation the RTA requires.

Reading a Consolidated Account Statement Properly

The half-yearly CAS is the most under-used document an investor receives, because two of its disclosures exist specifically to inform them about the distributor.

• Commission paid in rupees. The actual amount the AMC paid the distributor on that investor's holdings, scheme by scheme, in rupees rather than as a percentage. It is not an estimate and it is not optional.
• Expense ratio of both plans. The regular plan's ratio and the direct plan's ratio side by side, so the cost of advice is visible as a number.

A distributor who walks an investor through these two lines before the investor finds them independently converts a potentially awkward discovery into a demonstration of transparency. The disclosure is going to arrive either way; the only variable is who explains it.

The CAS also shows, for every folio, the units held, the current value, the transactions of the period and the nominee details on record — which makes it the simplest annual prompt to check that nomination is still current after a marriage, a birth or a bereavement.

When No Statement Arrives

If an investor reports receiving nothing, the cause is almost always one of four things, in this order of frequency: the email address on the folio is stale, the PAN is not linked so a consolidated statement cannot be generated, the folio saw no transaction in a month for which only the monthly CAS was due, or the units are held in demat so the statement comes from the depository instead. Checking those four resolves the query without a complaint.