BASICS OF REGISTRARS AND TRANSFER AGENTS

BASICS OF REGISTRARS AND TRANSFER AGENTS (Part 1)

Introduction to Registrars and Transfer Agents (RTAs): RTAs are intermediaries responsible for the back-end process of financial and non-financial transactions for corporates and mutual funds, acting as custodians of investor data and facilitators of transactions.
Need for RTAs: Mutual funds outsource their back-end activities to RTAs to focus on core activities, as they may not want to invest in these processes nor have the expertise to handle huge transactions professionally.
Types of RTAs: There are two types of RTAs: those serving corporates and their investors, and those serving mutual funds, their investors, and distributors.
Role of RTAs: RTAs are responsible for record-keeping of investor data, corporate actions, and general operations, including providing an interface between the corporate/fund house, investor, and depository.
Key Functions of RTAs:
- Security dematerialization
- Payout of dividend/interest
- Investor record-keeping and share transfer
- Processing purchase and redemption transactions for mutual funds
- Inquiry handling via phone, mail, and online
- Regulatory reporting
- Issuance of duplicate share certificates
- Investor Education and Protection Fund (IEPF) claim settlement
Importance of RTAs for Mutual Fund Companies: RTAs help reduce maintenance costs, provide one-point customer service, facilitate regulatory and MIS reporting, and maintain original documents of investor applications.
Importance of RTAs for Distributors: RTAs assist distributors in buying and selling mutual funds on behalf of clients, provide consolidated statements of sales, and facilitate commission calculations and payments.
Importance of RTAs for Investors: RTAs provide detailed information on new offers, NAV of funds, and payout of income distribution cum capital withdrawal (IDCW), process customer service requests, and provide account statements periodically.
Investor Service Centre (ISC) and Official Point of Acceptance (OPA): ISCs are points of contact for financial and non-financial transactions in mutual funds, equipped with state-of-the-art infrastructure and skilled manpower, while OPAs are locations specified by fund houses where transactions are deemed to have been submitted for processing.
Qualified Registrars and Transfer Agents (QRTAs): QRTAs are RTAs servicing more than 2 crore folios, categorized as Market Infrastructure Institutions (MIIs) by SEBI, and are subject to specific regulations and guidelines.

BASICS OF REGISTRARS AND TRANSFER AGENTS (Part 2)

Qualified Registrar and Transfer Agent (QRTA): An RTA that services more than 2 crores folios is considered a QRTA and must inform SEBI within 5 working days. A QRTA remains categorized as such for the next 3 financial years, even if the folio count falls below 2 crores.
RTA and Depository Interface: RTAs play a crucial role in the interface between companies and depositories (NSDL and CDSL) for the creation and maintenance of securities in electronic mode.
Conversion of Physical Securities to Demat Mode: SEBI has prescribed a detailed process for converting physical securities to demat mode and vice versa, with strict protocols to prevent duplicate securities and fraud.
Real-time Interface: A real-time interface between RTAs and depositories is essential for various corporate actions, such as:
- Converting physical securities to demat form
- Converting demat securities to physical form
- Creating new securities due to an IPO, bonus issue, or other corporate action
- Extinguishing securities due to winding up of a company, actions under the Insolvency and Bankruptcy code, merger of MF schemes, or winding up of a close-ended scheme
Financial Information Provider to Account Aggregator Network: RTAs, through their AMCs, and depositories are specified as Financial Information Providers (FIPs) in the securities markets, sharing financial information with Account Aggregators (AAs) based on customer consent.
Industry Overview: Leading RTA companies in India, such as Computer Age Management Services (CAMS) and KFin Technologies Private Limited (KFintech), provide services to mutual fund companies and facilitate online transactions.
Key Players: CAMS and KFintech are instrumental in the smooth functioning of mutual fund companies in India, providing services to all fund houses and facilitating online transactions through their portals and common portals like MF Central.