Transaction slip
Also written Transaction request slip · TRS
The 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.
In plain language
The application form exists to capture an investor for the first time. Once the folio exists, repeating all of that is waste. The transaction slip is the short form that replaces it.
Its one indispensable feature is the pre-printed folio number. That number is what tells the registrar's system whose units to move, whose signature to check the slip against, and where to send the confirmation.
Most AMCs print the slip as a counterfoil to the account statement, so the investor's next instruction arrives already identified. A blank slip is also available at AMC branches, distributors and ISCs, with a space to write the folio number in.
How it works
One slip handles many kinds of instruction. Investors use it for additional purchases, redemptions, switches, and also for non-financial transactions such as a change of address or change of bank details.
Validity turns on one thing: it must be signed according to the mode of holding of the folio. A joint folio held "jointly" needs every holder; one held on either-or-survivor basis does not. The registrar verifies each signature against the scanned specimen held in the R&T system.
The time stamping rules differ by what the slip is for, and this is examinable:
- Purchase — impressions on the face of the application form or transaction slip, and on the back of the payment instrument. The two must carry identical time stamp serial numbers, which is why form and cheque have to be received together.
- Redemption, switch or transfer — no payment instrument, so impressions go on the face of the request and on the investor's acknowledgement copy. If no acknowledgement is issued, the request is stamped twice.
- Non-financial transaction — all impressions go on the request itself.
If a basic check shows the document is incomplete, it must not be time stamped — it is returned over the counter for correction. But once a request has been accepted and stamped, it is not returned even if it turns out to be unacceptable.
A worked example
Mr Bose holds units in a scheme at NAV Rs 20 and wants money out. He tears off the transaction slip attached to his last account statement — folio number already printed — ticks "Redemption", and hands it in at an ISC before the 3.00 pm cut-off. The counter stamps the face of the slip and his acknowledgement copy with the same serial number. The scheme has a 1 percent exit load.
If he redeems 1,000 units:
Redemption price = Rs 20 − (1% × Rs 20) = Rs 19.80
Proceeds = 1,000 × Rs 19.80 = Rs 19,800
He asked for 1,000 units and got Rs 19,800, not Rs 20,000.
If instead he writes "Rs 20,000" in the amount box, the arithmetic runs the other way — the registrar has to redeem more units to net him that sum:
Units required = 20,000 ÷ 19.80 = 1,010.10 units
Same slip, same load, same NAV. Specifying units fixes what leaves the folio and lets the proceeds vary; specifying an amount fixes the proceeds and lets the folio take the hit. The registrar simply does what the box says.
Why NISM asks about it
Chapter 14 (Financial Transactions) opens with "Application Form Vs Transaction Slip" and its sample questions test the distinction from both ends — a transaction slip is used when the investor knows his own folio number, and it is the preferred mode for an existing investor making an additional purchase in the same scheme. Chapter 11 supplies the time stamping rules for where the impressions go. The exit load arithmetic above, including the 1,010.10 units, is the workbook's own worked example.
Common exam traps
- The transaction slip is not only for redemptions. Additional purchases, switches and non-financial requests all ride on it.
- What identifies the slip is the folio number, not the scheme name. Without it the registrar cannot place the request, and a new application form means a new folio.
- The signature requirement follows the mode of holding of the folio, not the size of the transaction. A fresh purchase application, by contrast, must be signed by all joint holders.
- A purchase slip and its cheque must carry identical time stamp serial numbers — so they must be presented together. A redemption request has no payment instrument and is stamped on the request and the acknowledgement, or twice if no acknowledgement is given.
- An incomplete document is never time stamped. It goes back over the counter. But once stamped, it is not returned even if found unacceptable.
- Specifying an amount is not the same as specifying units when a load applies — the unit count changes, as the 1,010.10 figure shows.
Check yourself
1.A transaction slip is usually used when the investor knows _______.
- a)His own folio number
- b)The scheme name
- c)The scheme bank account
- d)The scheme collecting bank
Show the answer
Answer: (a) His own folio number
A transaction slip has the pre-printed folio number to identify the investor in the system.
The folio is what makes the short form possible. For subsequent purchase transactions, if the folio number is quoted, several fields in an application form need not be filled up again.
Options B, C and D are all details about the scheme, not about the investor — and none of them identifies who is transacting. The folio does: a folio is like a bank account number, created for a fund house and its investors.
When it is used: the application form is designed to capture all investor information for the first time. Investors can use a transaction slip for subsequent transactions.
What it covers: the transaction slip is designed to capture multiple transaction type requests. Investors use it for carrying out redemptions, additional purchases, switches and even non-financial transactions such as change of address or change of bank details.
Financial and non-financial alike.
How an investor gets one: most AMCs provide transaction slip as a counterfoil to the account statement sent to the investor. The transaction slip has the folio number and account number of the investor, pre-printed.
Or a blank one: an investor can either use a pre-printed transaction slip form or he can use a blank transaction slip, which is available with AMC branches, distributors and ISCs and write the folio number in the space provided.
Writing the folio number in — again, the folio is the essential piece of knowledge.
What validates it: it has to be signed according to the mode of holding of the folio, to be valid — checked against the signature scanned and maintained in the RTA system.
2.The application form for a fresh purchase of mutual fund units has to be signed by ________.
- a)All joint holders
- b)First holder
- c)First and second holder
Show the answer
Answer: (a) All joint holders
The mandatory fields list signature of applicants — in the plural, covering everyone applying.
Why every holder must sign at the outset. The application form is the document that creates the relationship: the application form provides required information about an investor of a mutual fund. The information captured in the application form is entered in the RTA records. The investor is then assigned a folio number by the AMC.
And every holder's signature has to be captured for later use. Chapter 12 records that an application can have up to three joint holders. They may decide to operate their investments jointly or on either or survivor basis. All joint holders' signatures are captured in the R&T system irrespective of the mode of operation.
Irrespective of the mode — so all of them sign the form, whatever the operating instruction.
Which is why options B and C fall short at the application stage.
Contrast the transaction slip, where the mode of holding does govern: it has to be signed according to the mode of holding of the folio, to be valid. Under either or survivor, one signature can then suffice.
Why the signature matters so much: in order to verify subsequent transactions from the investor, the investor's signature is scanned and maintained in the RTA system, and Chapter 12 adds that the signature is verified for every transaction.
The other mandatory fields, for completeness: investor status in terms of resident/non-resident · details of bank account (pay-in and pay-out) · complete address of first holder · date of birth and guardian details for minors with documentary proof · PAN/PEKRN details · scheme, plan and option · nomination or declaration of Opted Out · other declarations such as FATCA/CRS, UBO, NPO.
And the form must be checked before acceptance — the application form should then be checked and validated for these fields before accepting it.
3.Which mode is preferred for an existing investor to make an additional purchase in the same scheme?
- a)Transaction slip
- b)Application form
- c)New folio creation
- d)Power of Attorney
Show the answer
Answer: (a) Transaction slip
After the fresh purchase, every subsequent purchase by the unit holder is called additional purchase. Additional units can be purchased by using a transaction slip.
Because the fund already has the investor's details. For subsequent purchase transactions, if the folio number is quoted, several fields in an application form need not be filled up again.
Option B would work but is unnecessary — the application form exists to capture all investor information for the first time.
Option C is actively unhelpful, and changes the character of the transaction: an existing investor may decide to make additional purchases under a new folio. This will be considered as fresh purchase.
A new folio means a fresh purchase and a full form — and splits the investor's holdings across two folios.
Option D confuses an authority with a mode. A power of attorney lets someone else transact; Chapter 12 records that PoA holders usually exercise all the rights of an investor... They can do normal transactions such as purchase and redemption of units on behalf of the investor. But he would still use a transaction slip.
How the slip identifies the investor: it has the pre-printed folio number to identify the investor in the system, or a blank one may be used with the folio number written in the space provided.
What else it can do: redemptions, additional purchases, switches and even non-financial transactions such as change of address or change of bank details.
And what makes it valid: it has to be signed according to the mode of holding of the folio.
The payment checks still apply to the instrument accompanying it — the cheque must not be stale or more than 3 months old, must not be post-dated, must match in words and figures, and must not be mutilated.
Where this is taught
- Series X-A · Chapter 17: Operational Aspects of Investment Managementintroduced here
- Series II-B · Chapter 14: Financial Transactionsintroduced here
Related terms
- Cut-off timeThe SEBI-prescribed clock time that, read together with the time stamp on the request, decides which day's NAV a mutual fund transaction is priced at.
- Exit loadA charge levied when an investor redeems units, calculated as a percentage of NAV and deducted from it, usually only if the units are sold within a stated holding period.
- Folio numberThe 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.
- 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.
- Official Point of AcceptanceA location a mutual fund has formally designated to receive transaction requests, where the application is time-stamped — and that stamp, not the moment the investor handed the form over, decides which NAV applies.