'In order to empower the investors in deciding the commission paid to distributors in accordance with the level of service received, to bring about more transparency in payment of commissions and to incentivise long term investment, it has been decided that:
There shall be no entry load for all mutual fund schemes
The scheme application forms shall carry a suitable disclosure to the effect that
the upfront commission to distributors will be paid by the investor directly to the distributor, based on his assessment of various factors including the service rendered by the distributor Of the exit load or CDSC charged to the investor, a maximum of 1% of the redemption proceeds shall be maintained in a separate account which can be used by the AMC to pay commissions to the distributor and to take care of other marketing and selling expenses. Any balance shall be credited to the scheme immediately.
The distributors should disclose all the commissions (in the form of trail commission or any other mode) payable to them for the different competing schemes of various mutual funds from amongst which the scheme is being recommended to the investor
This circular shall be applicable for :
Investments in mutual fund schemes (including additional purchases and switch-in to a scheme from other schemes) with effect from August 1, 2009
Redemptions from mutual fund schemes (including switch-out from other schemes) with effect from August 1, 2009.
New mutual fund schemes launched on and after August 1, 2009; and Systematic Investment Plans (SIP) registered on or after August 1, 2009'
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