Folio number
Also written Folio · Mutual fund folio
The unique account number a fund house allots to an investor, under which the registrar holds that investor's units across every scheme of the fund, along with the bank mandate, address and signature.
In plain language
A folio is to a mutual fund what an account number is to a bank. The workbook says exactly that: "A folio is like a bank account number, created for a fund house and its investors."
One folio can hold units of many schemes of the same fund house. What it cannot do is cross fund houses — an investor with money at four AMCs has at least four folios.
Everything the registrar knows about an investor hangs off it. The application form is keyed in, the AMC allots the folio number, and from that moment the folio carries the name, the scanned signature, the address for correspondence, the bank mandate, the tax status, the nomination and the holding pattern. The folio number, in the workbook's words, is the unique identification number that helps the R&T agent recognise an investor.
How it works
Three consequences follow from a folio being an account rather than a holding.
Quoting it saves work. On a subsequent purchase, if the folio number is quoted, several fields of the application form need not be filled again. A transaction slip carries the folio number pre-printed for exactly this reason.
Not quoting it creates a second account. An existing investor who makes an additional purchase under a new folio has made a fresh purchase, not an additional one. The units are real, but the investor now has two of everything to maintain.
Changes propagate through PAN, not through the folio. For a KRA-compliant folio the fund will not register an address change directly — the investor updates it with the KRA, which then tells the R&T agents, who update all folios of that investor across all mutual funds using PAN as the identifier. The Consolidated Account Statement is built the same way: consolidation is on the basis of PAN, and for joint holdings on the PAN of the first holder together with the pattern of holding.
Folios are also how the industry measures its registrars: an RTA whose folios exceed 2 crore at any time during a financial year is a Qualified RTA, must tell SEBI within 5 working days, and stays a QRTA for the next 3 financial years even if folios fall back below the threshold.
A worked example
Mrs Rao invests with one AMC under folio 91234567/89:
| Scheme in the folio | Value |
|---|---|
| Liquid fund | Rs 2,40,000 |
| Flexi cap fund | Rs 6,80,000 |
| ELSS | Rs 1,50,000 |
| Total in one folio | Rs 10,70,000 |
One folio, one address, one bank mandate, one nomination, one statement of account.
A year later she invests Rs 4,00,000 more in the same AMC's debt fund through a distributor who fills a fresh application form instead of quoting 91234567/89. The RTA has no folio number to attach it to, so the AMC allots a new folio, 91234599/12 — and the transaction is booked as a fresh purchase.
Nothing was lost, but her servicing has doubled. A change of bank mandate now has to be lodged twice. A nomination registered on the first folio does not cover the second. If she later redeems "everything", the request has to name both folios.
The one thing that still pulls it together is PAN: because the CAS is consolidated on PAN, both folios — and her holdings at three other AMCs — still arrive in a single monthly statement.
Why NISM asks about it
Chapter 14 (Financial Transactions) introduces the folio in the application-form section and its sample question asks who records the investor's information under the allotted folio number — the R&T agent. Chapter 15 (Non-Financial Transactions) opens by defining the folio number as the unique identification number that lets the RTA recognise an investor, then spends the chapter on changes made to it. Chapter 6 uses the 2-crore folio count to define a QRTA. Expect questions on what a folio can hold, on fresh versus additional purchase, and on which intermediary owns the record.
Common exam traps
- A folio is per fund house, not per scheme and not per investor. Many schemes of one AMC sit in one folio; two AMCs can never share one.
- An additional purchase under a new folio counts as a fresh purchase. Quote the folio number, or the investor acquires a second account.
- The AMC allots the folio number; the RTA maintains the record. Both appear as options in the sample questions.
- An address change on a KRA-compliant folio goes to the KRA first, not to the fund. The KRA pushes it to every RTA, which updates all the investor's folios across all mutual funds by PAN.
- An email ID or mobile number can be registered in the folios of only one investor (one PAN) — a family member's contact needs a Family Declaration, and changing both email and mobile together requires a cooling period of 10 days between the two changes.
- CAS consolidation runs on PAN, not on folio. Multiple folios do not mean multiple statements.
- Up to three joint holders may be on a folio, and all joint holders' signatures are captured in the R&T system regardless of the mode of operation.
Where this is taught
Free preparation for NISM Series II-BRelated terms
- Consolidated Account StatementA single statement showing an investor's transactions and holdings across every scheme of every mutual fund in India, linked by PAN and issued monthly where there has been a transaction.
- New Fund OfferThe period in which a mutual fund scheme's units are offered to the public for the first time, at a fixed NFO price rather than at NAV, and during which the registrar builds the scheme's first register of investors.
- NominationThe account holder's written direction naming who receives the securities on death — up to ten nominees for a demat account, with percentages that must total 100, mandatory for single holdings.
- Registrar and Transfer AgentThe SEBI-registered agency that keeps the investor records of a mutual fund — processing purchases and redemptions, updating folios and unit capital, and issuing account statements.
- Transaction slipThe short form an existing investor uses instead of a full application — it carries the folio number, so the registrar can process a purchase, redemption, switch or profile change without re-keying the investor.
- Know Your CustomerThe identity and address check every investor must clear before a bank, broker or depository participant will open an account — mandatory under the Prevention of Money Laundering Act, 2002.
- Transfer of IDCW planA facility that automatically invests the IDCW (dividend) declared in one scheme into another scheme of the same mutual fund, on the next business day after the record date.
- Qualified RTAA registrar servicing more than two crore folios — treated by SEBI as a Critical Infrastructure Institution and held to enhanced monitoring, reporting and business continuity requirements.
- Change of addressThe investor service request to update the address on a folio — signed by the first named holder, backed by PAN and a fresh address proof, and confirmed to both the old and the new address.
- Stop transferA freeze an RTA marks on physical securities reported lost, or under a court restraining order, so they cannot change hands — lifted if no FIR arrives within 21 days of the notice of loss.
- Instrument of transferThe stamped deed (Form SH-4) signed by transferor and transferee to transfer physical securities — valid only if lodged within 60 days of execution; since April 2019 transfers need demat.
- NIGOA transaction the registrar has flagged as "Not in Good Order" because the application and the money do not reconcile or the paperwork is defective — units are not issued until it is fixed.
- Third-party chequeA payment for a mutual fund investment drawn from a bank account of which the first holder is not an account holder — not acceptable, and the reason registrars run third-party verification on every subscription.
- Central KYC RegistryThe Government's central digital store of KYC records for the whole financial sector, operated by CERSAI, which de-duplicates records and issues each client a unique KYC Identifier.
- FATCA and CRSTwo cross-border tax transparency regimes — one American, one OECD — under which a mutual fund's registrar identifies foreign-taxable investors and reports their accounts to the CBDT for automatic exchange.
- Statement of AccountsThe registrar's proof of investment for a mutual fund folio, showing amount, price and units for each transaction and, from the second one, the balance units and their current value.
- T-30 and B-30SEBI's split of mutual fund inflows into the top 30 cities by AUM (T-30) and everywhere beyond them (B-30), used to pay higher distribution incentives for B-30 inflows — tagged by the RTA from the investor's PIN code.
- Transmission of unitsThe transfer of mutual fund units after a unit holder dies — to the surviving joint holder, the registered nominee or a legal heir — with documents that depend on who claims and how much is at stake.
- Minor becoming majorThe change of status in a folio held in a minor's name when the minor turns 18 — the new major completes PAN, KYC and bank updates, and no transactions are allowed until the AMC's records show the change.
- Two-factor authenticationThe requirement that online mutual fund subscriptions and redemptions be authenticated by two factors, one of them an OTP sent to the email or phone registered with the AMC — signature does the job offline.
- Institutional investorsOrganisations rather than individuals that invest in mutual funds — companies, partnership firms, associations of persons, societies and trusts, banks and FIs, and FPIs — each acting through authorised signatories.
- Account AggregatorAn RBI-regulated NBFC that retrieves a customer's financial information from Financial Information Providers — including AMCs through their RTAs — and passes it on only with the customer's explicit electronic consent.
- Change of nameThe non-financial request by which an investor updates the name on a mutual fund folio — for marriage, divorce or a corrected spelling — with documents that match the reason and a bank account already updated first.
- Non-financial transactionsA request that changes a mutual fund folio's records — address, bank details, nominee, name — without moving any money or touching the NAV, processed by the RTA on its own SEBI-mandated timetable.
- NRI investment accountsThe NRE and NRO bank accounts through which an NRI must invest in an Indian mutual fund — one repatriable, one not — along with the extra KYC documents an NRI has to provide.
- PAN updationThe non-financial transaction by which an investor adds or corrects the PAN on a mutual fund folio, validated against the Income Tax database and required before any redemption can go through.
- Registered bank accountsThe bank accounts an investor links to a mutual fund folio for pay-outs — up to 5 for an individual and 10 for a non-individual — with one marked as the default for redemption proceeds.
- RTA inter-operable platformA single, user-friendly platform built jointly by all RTAs for mutual fund transactions, service requests, complaints and investment reports across fund houses — the workbook gives no rupee figure for it.
- Common Account NumberA single number allotted by MF Utilities under which an investor's mutual fund holdings across multiple AMCs are consolidated, so one form and one payment can cover several schemes.