AMFI – Association of Mutual Funds in India

What do you do when you're interested in a mutual fund scheme, but know nothing about its working?

Simple, you look up the mutual fund online! Everything you need to know about a fund is available at your fingertips. However, the same was not true at the start of the mutual fund industry in India.

For the longest time, investors deemed mutual funds a risky investment. They had no faith in the market, primarily because there was a serious lack of awareness about the investment scheme. It was clear the industry needed a push from the government. As a result, the Association of Mutual Funds in India (AMFI) was born on 22nd August 1995.

What is AMFI?

AMFI is a non-profit organisation that SEBI regulates. The body serves as the primary regulator for the industry and keeps the investors informed about the latest developments in the market. It also aims to develop the industry ethically and professionally to ensure maximum transparency. And as of now, AMFI comprises over 40 SEBI-registered Asset Management Companies (AMC).

How does AMFI work?

Think of the AMFI association of mutual funds in India as the one-stop-shop for everything you need to know about the MF market. To that end, AMFI serves the following functions:

• Defines and maintains a uniform set of professional standards
• Distributes information about mutual funds
• Takes disciplinary actions against unlawful practices and violations of Code of Conduct
• Safeguards the interest of the investor and AMCs
• Rolls out nationwide investor awareness programs to boost awareness about mutual fund schemes
• Closely works with SEBI to regulate the industry
• Represents the government, finance ministry, SEBI, and RBI on behalf of the mutual fund industry

However, this is not all! To boost the credibility of the industry further, AMFI offers protection through the AMFI registration number or ARN. Every adviser, fund house, agent, and the trustee has to register to earn a unique ARN. It serves as a licence for the holder to sell mutual funds to prospective investors. But, how does it benefit the investors?

What is the Role of AMFI in a Mutual Fund?

As mentioned above, the distribution of MF-related details falls under the purview of the association of mutual funds in India. NAV changes, expense ratio, ETF, fund manager profiles, and other crucial information is communicated duly on their official website. So, the average investor is always in the know. Nevertheless, they can still fall prey to fraudulent practices.

Functioning under SEBI's guidance, AMFI acts as the industry regulator, overseeing all participants in the mutual fund sector. It ensures the smooth implementation of rules and regulations while balancing industry growth and protecting investors' interests. 

Given the industry's reliance on online platforms, AMFI also ensures these platforms offer easy access, secure investments, and protect investor identities and funds. AMFI promotes transparency in every transaction, fostering accountability among industry stakeholders. It ensures adherence to best business practices through regular updates and discussions on regulatory frameworks.

Through initiatives like issuing ARNs and enhancing investor education, AMFI reduces the risk of fraud and upholds the highest standards set by SEBI and itself in the mutual fund industry.

Case in point: suppose you want to invest in a fund through SIP, so you connected with an MF distributor. To check if they are authorised by the AMFI and hold a valid ARN, you can go to AMFI's official website and run a quick background check.

What are the Objectives of AMFI?

Here are the key objectives of AMFI:

1. Promoting best practices

AMFI promotes best business practices among its members by regularly updating guidelines and standards. This ensures that all members adhere to high operating standards, contributing to the mutual fund industry's overall stability and growth.

2. Regulatory compliance

AMFI collaborates closely with the Securities and Exchange Board of India (SEBI) to ensure that all mutual funds operate within the regulatory framework. This includes implementing SEBI’s guidelines and making sure that all transactions are transparent and compliant with the regulations.

3. Investor education and awareness

One of AMFI's primary objectives is to increase public awareness about mutual funds. This is achieved through educational programs, seminars, workshops, and media campaigns. By doing so, AMFI helps investors understand the benefits and risks associated with mutual funds, promoting informed decision-making.

4. Protecting investor interests

AMFI acts as a watchdog for the mutual fund industry, safeguarding investors' interests. It provides a platform for investors to lodge complaints and seek redressal for grievances related to mutual fund investments, thereby maintaining trust and confidence.

5. Facilitating industry representation

It acts as a representative body for the mutual fund industry, liaising with government bodies, SEBI, the RBI, and other financial organisations. This helps advocate for policies and regulations that support the industry’s growth while protecting investor interests.

Committees in the AMFI

AMFI has established several committees to meet its objectives effectively. These include:

1. AMFI Financial Literacy Committee
2. AMFI Committee on Certified Distributors (ARN Committee)
3. AMFI ETF Committee
4. AMFI Committee on Operations, Compliance, and Risk
5. AMFI Valuation Committee
6. AMFI Equity CIO Committee

These committees focus on various aspects, such as education, compliance, valuation, and equity, to ensure the smooth functioning of the mutual fund industry.

What is the AMFI Registration Number?

The AMFI Registration Number, also known as ARN, is a unique identifier given by the Association of Mutual Funds in India (AMFI) to mutual fund distributors, agents, or intermediaries. It serves as a certification for professionals within the mutual fund industry. 

To receive an ARN, individuals must pass the certification exam conducted by the National Institute of Securities Markets, which is a public trust established by SEBI offering various securities market training programs. Senior citizens, however, must complete the Continuing Professional Education (CPE) program to obtain the ARN.  

No individual or firm is authorised to sell or recommend mutual funds to investors without this number.

Why Should Investors Know About the ARN?

Investors must be aware of the AMFI Registration Number (ARN) as it is crucial to ensure they deal with certified and credible mutual fund distributors. It’s a unique identifier assigned to qualified mutual fund agents, brokers, and intermediaries. The ARN indicates that they have met the necessary standards set by AMFI and have passed required certifications, such as those from the National Institute of Securities Markets (NISM).

Knowing the ARN helps investors verify the legitimacy of their mutual fund distributors, ensuring they receive accurate and reliable advice. This lessens the risk of fraud and ensures that investors deal with professionals who adhere to industry regulations and ethical standards. By checking the ARN, investors can confidently make informed decisions about their investments, fostering a safer and more trustworthy mutual fund environment.

How to Register or Renew the New ARN

There are two ways to register or renew an AMFI Registration Number: online and offline. Here’s how to do it.

Online mode of registration and renewal of ARN

1. Link Aadhaar - Ensure your Aadhaar is linked with your registered mobile number.
2. Submit Aadhaar details - If not already done, manually submit your Aadhaar details.
3. Pay fees - Complete the registration or renewal fee payment through online banking.
4. Receive ARN license - Upon uploading the necessary documents, you will instantly receive your new ARN license.

Note: You do not need to submit your NISM certification, as it will be automatically retrieved from the NISM portal.

Offline mode of registration and renewal of ARN

1. Visit the AMFI portal - Go to the official AMFI website and log in using your credentials. Your user ID will serve as your ARN number, and the password will be emailed to you.
2. Authenticate - After logging in, AMFI will access your personal information directly from NISM.
3. Pay fees - Once you pass the NISM certification or complete the CPE, pay the registration fee either online via net banking, debit/credit card, or directly at the fund house.
4. Receive ARN license - Upon completing these steps, the registration or renewal will be processed immediately.

This streamlined process ensures that all intermediaries are appropriately registered and certified, maintaining the integrity and trustworthiness of the mutual fund industry.

In conclusion

With AMFI, mutual fund industry has undoubtedly become credible and flourished leaps and bounds since the 90s. 

Its rigorous standards and transparency initiatives have played a pivotal role in instilling investor confidence. Its efforts in investor education and protection have significantly contributed to the growing popularity and acceptance of mutual funds among Indian investors. 

Furthermore, AMFI's campaigns and regulations ensure that the mutual fund industry operates with professionalism and integrity. As the industry evolves, AMFI remains committed to nurturing a robust and trustworthy financial ecosystem. This underscores its pivotal role in the growth and development of India's mutual fund sector, promising a secure financial future for countless investors.

So, if you're toying with the idea, get started today! Join the Moneyfy app to get daily MF updates directly on your smartphone. Read the latest news, compare charts, and a lot more. 

FAQs

Does AMFI regulate mutual funds?

No, mutual funds in India are overseen by SEBI. AMFI (Association of Mutual Funds in India) acts as a self-regulatory body in collaboration with SEBI to uphold ethical standards in the industry.

How many mutual funds associations are there in India?

In India, the primary association for mutual funds is AMFI. AMFI represents all SEBI-registered mutual fund companies and promotes the industry through ethical practices and investor education.

What are AMFI fees?

AMFI (Association of Mutual Funds in India) charges fees for various services, including registration fees for asset management companies and distributor fees for individual agents and agencies operating in the mutual fund sector.

What is the difference between SEBI and AMFI?

SEBI is the regulatory authority for India's securities market, including mutual funds. AMFI, however, is a self-regulatory organisation specifically dedicated to overseeing the mutual fund industry, following guidelines established by SEBI.

What is an AMFI certificate?

There is no specific "AMFI certificate." However, completing the AMFI distributor certification exam qualifies individuals to obtain an ARN (AMFI Registration Number). This ARN is essential for selling mutual funds in India ensuring compliance with regulatory standards.

How to join AMFI?

To join AMFI, individuals must pass the AMFI certification exam. This exam evaluates knowledge of mutual fund operations and regulations. Upon passing, individuals receive an ARN, allowing them to act as authorized mutual fund distributors.

Is AMFI a government body?

No, the AMFI is not a government body. It is a non-profit body that comprises the asset management companies (AMCs) of all mutual funds in India. 

How do you qualify for AMFI?

To be a part of the AMFI, mutual fund distributors must pass the NISM Series V- A: Mutual Fund Distributors Certification Exam, then register with the AMFI and get an ARN (AMFI Registration Number.) 

What is the purpose of AMFI?

The primary purpose of the AMFI is to protect the interests of AMCs and Indian investors. It also aims to make investments more transparent, accessible, and attractive.