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Top 50 Questions on NISM Series 19C AIF Managers

Complete Top 50 Questions on NISM Series 19C AIF Managers guide with tips, strategies, previous year questions and mock tests for 2026 exams.

Top 50 Questions on NISM Series 19C AIF Managers

Top 50 Questions on NISM Series 19C AIF Managers

NISM Series 19C is the Alternative Investment Fund Managers (AIFM) Certification Exam that tests your knowledge of regulations, compliance, and operations related to Alternative Investment Funds (AIFs).
Whether you’re a fresher, a practicing fund manager, or an aspirant preparing for the exam, this guide gives you the 50 most frequently asked questions, all backed by clear, concise answers.

Table of Contents

Introduction

Alternative Investment Funds (AIFs) have become a key component of India’s wealth management landscape. With the introduction of the AIF Act 2012 and the rules issued by the Securities and Exchange Board of India (SEBI), there’s a growing demand for qualified professionals who can navigate this complex regulatory environment.

The NISM Series 19C AIF Managers exam is designed to certify that a person possesses the necessary knowledge to manage and operate an AIF effectively.

This blog post compiles the 50 most frequently asked questions – a perfect study companion for your exam preparation.

The NISM 19C Exam Structure

Feature Details
Exam Code 19C
Exam Mode Computer‑Based Test (CBT)
Duration 2 hours
Paper Format 90 multiple‑choice questions (MCQs)
Marking Scheme +4 for correct, -1 for incorrect (no negative marking for unattempted)
Passing Criteria Minimum 60% (i.e., 54 correct answers)
Exam Fee ₹ 5,500 (incl. GST, as of 2024)
Validity 3 years from date of issuance

Top 50 Questions & Answers

Fund Structure & Classification

  1. What are the three categories of AIFs under the AIF Act?

    • Category-I: Venture Capital Funds, Angel Funds, infrastructure, and social sector.
    • Category-II: Fund of funds, non-IPO equity/debt, arbitrage.
    • Category-III: Hedge funds, derivative instruments, and other non-traditional strategies.

  2. Which category is allowed to invest in listed securities?

    • Category-II and Category-III can invest in listed securities.

  3. Can Category-I AIFs invest in derivatives?

    • Yes, but only for hedging or risk management purposes. Direct speculative trading is prohibited.

  4. What is the maximum leverage allowed for Category‑III AIFs?

    • Generally 3:1 (i.e., 300% of assets), but can vary based on policy.

  5. Define “Fund of Funds” under the AIF Act.

    • A fund that invests in other AIFs or private equity funds.

Registration & Regulatory Requirements

  1. Who must register with SEBI to become an AIF Manager?

    • Any person who manages or advises on the investment of an AIF.

  2. What documents are required for registration?

    • PAN, address proof, bank details, company registration documents, AIF registration letter, etc.

  3. What is the role of the ‘Register of AIF Managers’?

    • Public record of all registered managers; ensures transparency and accountability.

  4. Is prior experience in mutual funds mandatory?

    • No, but relevant experience enhances credibility.

  5. What is the difference between a ‘Mani­ger’ and a ‘Custodian’?

    • Manager: Executes investment decisions.
    • Custodian: Safeguards assets.

  6. What is SEBI’s “Code of Conduct” for AIF Managers?

    • Ethical guidelines covering disclosure, conflict of interest, and fiduciary duties.

  7. Can a non‑resident Indian (NRI) register as an AIF Manager?

    • Yes, if they meet eligibility and comply with SEBI regulations.

  8. How often must AIF Managers submit compliance reports?

    • Quarterly and annual reports as per SEBI’s guidelines.

  9. What is the ‘Minimum Capital Requirement’ (MCR) for AIF Managers?

    • ₹10 lakh for Category‑I and II; ₹25 lakh for Category‑III (subject to change).

  10. What are the penalties for non‑compliance?

    • Fines, suspension, or cancellation of registration.

Risk Management & Compliance

  1. What is the purpose of the “Risk Management Framework” for AIFs?

    • To identify, assess, monitor, and mitigate risks associated with investments.

  2. Which risk types are covered under SEBI’s risk framework?

    • Market, credit, operational, liquidity, concentration, and legal risks.

  3. Explain “Liquidity Management” in an AIF context.

    • Ensuring sufficient liquid assets to meet redemption requests.

  4. What is the “Internal Audit” requirement?

    • Annual audit by an independent auditor to verify compliance.

  5. Define “Valuation Committee” and its responsibilities.

    • A committee that approves valuations of assets and ensures accuracy.

  6. How is the “Investment Policy Statement” (IPS) used?

    • Outlines the fund’s investment objectives, risk tolerance, and asset allocation.

  7. What is “KYC” for investors in AIFs?

    • Know‑Your‑Customer process to verify identity and source of funds.

  8. Explain the “Redemption Policy” for AIFs.

    • Conditions, notice periods, and valuation methods for investor exits.

  9. What is the “Compliance Manual” and who drafts it?

    • A self‑regulatory document drafted by the manager to align with SEBI norms.

  10. Describe the “Safeguard Mechanism” for AIFs.

    • Segregation of investor assets, use of a custodian, and periodic audits.

Valuation & Accounting

  1. What are the primary valuation methods for illiquid assets?

    • Comparable company analysis, discounted cash flow, and market multiples.

  2. When is a “fair‑value” assessment required?

    • At the end of every reporting period and during portfolio reviews.

  3. Who is responsible for asset valuation?

    • The valuation committee; often assisted by external valuation experts.

  4. What is the “Net Asset Value” (NAV) of an AIF?

    • Total value of assets minus liabilities, divided by the total number of units.

  5. Explain “Cost‑to‑Value” principle in accounting.

    • Assets are recorded at their acquisition cost unless revalued.

  6. What is the “Liability‑Based” approach to valuation?

    • Valuing assets considering the liabilities that might use them.

  7. Define “Revaluation Reserve” and its purpose.

    • A reserve account to record gains/losses from asset revaluation.

  8. What is the “Audit Trail” requirement for valuation?

    • Detailed documentation of valuation process and assumptions.

  9. Explain “Book‑to‑Market Ratio” relevance for AIFs.

    • Used to assess over/under‑valuation of portfolio holdings.

  10. What is “Multiple‑Period Valuation” and why is it important?

    • Valuing assets over multiple reporting periods to track performance.

Reporting & Disclosure

  1. What periodic reports must AIF Managers submit to SEBI?

    • Quarterly reports, annual reports, and periodic compliance updates.

  2. Describe the “Investor’s Return Statement” (IRS).

    • Provides investors with detailed returns, fees, and performance.

  3. What is the “Transparency Index” for AIFs?

    • A SEBI metric measuring disclosure practices.

  4. When should the “Annual Report” be filed?

    • Within 90 days of the financial year-end.

  5. Explain the “Investment Disclosure Statement (IDS)”.

    • Detailed information about the fund’s objective, strategy, and risk profile.

  6. What is “Form‑MISC” in the context of AIFs?

    • Miscellaneous disclosure required for certain compliance matters.

  7. Describe “Performance Benchmarking” for AIFs.

    • Comparing fund performance against relevant indices or peers.

  8. What is the “Redemption Notice” and its significance?

    • Official communication to investors about upcoming redemption periods.

  9. Explain the “Compliance Certificate” requirement.

    • Confirmation that the fund complies with all regulatory norms.

  10. When can a manager change the “Investment Policy Statement”?

    • With prior SEBI approval or when major material changes occur.

Taxation & Corporate Governance

  1. What is the tax treatment of AIFs in India?

    • Income taxed at the fund level (if a company) or at the investor level (if a partnership).

  2. Explain the “Capital Gains Tax” impact on AIF investors.

    • Short‑term (if held < 36 months) taxed at 15%; long‑term taxed at 20% with indexation.

  3. What are “Withholding Tax (WHT)” obligations in AIFs?

    • SEBI mandates WHT on certain transactions; managers must remit accordingly.

  4. Define “Corporate Governance” for AIF Managers.

    • Structures, processes, and controls that ensure accountability and transparency.

  5. What is the role of the “Board of Directors” in an AIF?

    • Oversight of strategy, risk, and compliance; ensures fiduciary duties.

Practical Tips for Exam Success

Tip Why It Works
1. Create a Revision Calendar Break the 50 questions into weekly chunks to avoid cramming.
2. Use Flashcards Helps with quick recall of definitions (e.g., Category-I, MCR).
3. Mock Tests Simulate exam conditions; identify weak areas.
4. Focus on SEBI Memoranda They contain the exact wording of many exam questions.
5. Join a Study Group Discussing complex topics like valuation methods clarifies doubts.
6. Practice Case Studies Real‑world scenarios reinforce theoretical knowledge.
7. Keep Updated with Rule Amendments SEBI often updates guidelines; stay current via SEBI portal.
8. Time Management Allocate 1.3 minutes per question; use the “fast‑scan” technique.
9. Avoid “Know‑All” Bias If unsure, skip and return; you’ll save time for easier ones.
10. Review Incorrect Answers Understand why you missed; prevents repeat mistakes.

FAQ

Question Answer
Is SEBI’s Fee Exempt for NRI Managers? No, NRI managers must pay the same registration fee as Indian residents.
Can I take the exam in English only? The exam is offered in both English and Hindi; choose the language you’re comfortable with.
What if I fail the first attempt? You can reappear after 12 weeks; no additional fee beyond the application charge.
Do I need to bring a physical ID for the exam? Yes, a government‑issued ID is required on exam day.
Are there any pre‑exam webinars? SEBI occasionally offers webinars; check the official website or exam portal.

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