FAQs on Direct Plan

As per Securities and Exchange Board of India (SEBI) circular CIR/IMD/DF/21/2012 dated September 13,
2012, Mutual Funds/AMC have been mandated to provide separate plan for direct investments,
i.e,investments not made through distributors in existing and new schemes. This direct plan will have
lower expense ratio (excluding distribution expenses, commission, etc.). The plan shall have separate
NAV.
In order to comply with the above regulations, AMCs have classified the existing plans as Regular plan
and have created identical schemes and their related options under the Direct plan as well. These Direct
st
plans are available for investors with effect from 1 January 2013.
Following are the FAQs based on the general rules followed across all Fund houses. However,
some of the applicability may vary from Fund to Fund and hence SID/KIM/Addendums issued by
the Asset Management Companies or their websites can be referred for more & latest details.
1. If I mention the distributor code in the application and select the scheme under direct plan or
if I dont mention the distributor code in the application and select the scheme under
existing/regular plan, how will my investment be classified?
The following matrix may be referred for better understanding
S No

Distributor code mentioned

in the application

Scheme / Plan Selected in

the application

1
2
3

ARN-XXXX
Blank / DIRECT
ARN-XXXX

XYZ Regular Plan

XYZ Regular Plan
XYZ Direct Plan

4
5
6

Blank / DIRECT
ARN-XXXX
Blank / DIRECT

XYZ Direct Plan

Not selected any plan
Not selected any plan

Plan considered for

processing
XYZ Regular Plan
XYZ Direct Plan
XYZ Direct Plan & Broker
Code will be ignored and
considered as DIRECT.
XYZ Direct Plan
XYZ Regular Plan
XYZ Direct Plan

2. Will the investment already made without distributor code in the existing/regular plan be
converted into the direct plan automatically?
No. It will continue to remain in the existing/regular plan. Investors desiring to bring the existing
investment under Direct Plan, may do so by submitting a switch request
3. I have some investments made through some distributors in my folio. Can I convert those
investments under direct plan?
Yes. You can submit a switch request for converting the same from existing/regular plan to direct
plan.
4. I have made investments partially through the distributor and partially without a distributor.
Can I convert my entire investments to direct plan?
Yes. You can do so by submitting a switch request.
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FAQs on Direct Plan

5. Is the NAV for direct plan different from the NAV for the existing/regular plan?
st

Yes. On the effective date i.e.1 January 2013 when the direct plan was introduced, the NAV will be
same for both existing /regular plan and the direct plan. Thereafter, there will be a difference in the
NAV based on the expense ratio.
6. I have an investment in the existing/regular plan which is not routed through any distributor.
Will the future dividend reinvestments take place automatically in the direct plan?
No. Dividend reinvestments will take place in the existing/regular plan even though the investment is
not routed through the distributor.
However, if you request for the conversion from regular/existing plan to Direct Plan, then all future
dividend reinvestments after conversion will happen only under the direct plan.
7. If I want to convert my investments which were not done through the distributor from the
existing/regular plan wherein exit load period is still in force, will the exit load be deducted
at the time of conversion (switch) to direct plan?
No. The exit load will not be deducted at the time of conversion (switch). However, the exit load will
be deducted if the units are redeemed/switched-out from the Direct Plan before the exit load period is
over. The age of the exit load will be from the date of investment in the existing/regular plan. As the
exit load applicability may vary from fund to fund, you may refer to the Addendums issued by the
Asset Management Companies or their websites for more details.
8. If I want to convert my investments which were done through the distributor from the
existing/regular plan wherein exit load period is still in force, will the exit load be deducted at
the time of conversion (switch) to direct plan?
Yes. The exit load will be deducted at the time of conversion (switch) itself. After conversion, for any
further switch or redemption from the direct plan, no exit load will be deducted even if the exit load
period is not over. As the exit load applicability may vary from fund to fund, you may refer to the
Addendums issued by the Asset Management Companies or their websites for more details.
9. I have a running SIP/STP under existing/regular plan which is not routed through any
distributor. Should I give a request for conversion to direct plan for the future installments?
No. The request for the conversion is not required as the future SIP/STP installments will be
automatically converted to direct plan if the SIPs/STPs were registered not through a distributor.
However, the installments already triggered and processed in the regular plan will not be
automatically converted into the direct plan. If conversion for those assets is required, a separate
switch request will have to be given for converting the entire unit balance in the regular plan .
For STPs the target scheme (switch-in) will be considered for the conversion into direct plan.
You may refer to the Addendums issued by the Asset Management Companies or their websites for
more details.

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FAQs on Direct Plan

10. Will the conversion of the future installments of my SIP/STP registered under the
exiting/regular plan be governed by the terms and conditions which were applied at the time
of SIP registration or will the terms and conditions be different for the future installments?
The terms and conditions will remain the same for the future installments of the SIP/STP registered
under the regular plan.

11. I have SIP registered through distributor in existing/regular plan. Can I give a request for
converting the future installments of the SIP to direct plan?
Yes. You can give a request for the conversion to direct plan. However, the terms and conditions that
prevailed at the time of original registration will continue for the future SIP installments.

12. I have a dividend transfer plan (DTP) in the existing/regular plan and also a special product of
STP which was launched by AMCs based on appreciation/reverse switch. Both these plans
are not routed through the distributor. Will the future installments of DTP and also the future
installments of the special STPs be converted into direct plan automatically?
As the guidelines in this regard vary from Fund to Fund, you may refer to the Addendums issued
by the Asset Management Companies or their websites for more details.
13. I am a NRI investor. Will TDS be deducted at the time of conversion from the existing/regular
plan to direct plan?
Yes. TDS will be deducted as applicable for NRIs.
14. The value of my investments will attract capital gains if I go for redemption/switch out. If I go
for conversion from regular plan to direct plan, will my conversion be treated on par with
redemption and switch-out and capital gains be charged at the time of conversion?
Yes. It will entail tax consequences. However, it is advisable the investor consults a professional tax
consult before initiating such requests.
15. My current investments in MF are in demat form. If I wish to make additional purchase in
the same folios under direct plan and hold it non-demat form, will I be able to do so ?
Yes. You can purchase additional units in the same folio under direct plan and hold the units in non
demat form. CAMS will facilitate holding of such units in non demat form.

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