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AMFI: Association of Mutual Funds in India - All you need to know as a Mutual Fund Investor
Have you ever wondered how big the Indian mutual fund market is? The size of assets in a mutual fund market is around INR 50 Lakh Crore. With an investor base of 4.21 Crore and 2.56 Lakh Distribution Partners, the Net Assets under Management (AUM) of the Mutual Fund Industry crossed INR 50 Lakh Crore in December 2023. But who manages all this? Is the mutual fund market secure? The governing force of the mutual fund industry is AMFI which stands for Association of Mutual Funds in India. This article aims to provide background information on the regulatory body of mutual funds in India, that is, about AMFI.
Association of Mutual Funds in India (AMFI)
The Association of Mutual Funds in India (AMFI) was incorporated in the year 1995 as a non-profit association. This non-profit association is a collaboration between mutual funds registered with the Securities and Exchange Board of India (SEBI) and all the registered Asset Management Companies (AMCs). The objective behind incorporating AMFI is to have an independent dedicated body for monitoring the mutual funds in the Indian market. As a result, the focus of AMFI is to introduce and enhance transparency and professionalism in the Indian mutual fund market. Moreover, the interest of the unit holders of the mutual fund are protected as well.
Role of AMFI
Apart from setting up a healthy environment for mutual fund transactions in Indian market, following are the specific role of AMIF:
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To respond timely and efficiently to the issues, challenges and other concerns faced by unit holders, AMFI members, and other stakeholders at large, related to mutual funds.
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To serve as a link between the important and supreme Government bodies like SEBI, Reserve Bank of India, Government of India, and so on, for discussing the issues and policy-related matters pertaining to mutual funds.
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To introduce guiding principles and best practices for AMCs so as to bring uniformity in their operations and performance.
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To deliver vital information related to mutual funds like performance of mutual funds, Net Asset Value (NAVs) of all mutual funds schemes, and other useful information of the mutual fund industry via its official website and other resources.
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To create awareness amongst the Indian masses about mutual funds.
AMFI Registration Number (ARN)
Every mutual fund agent/distributor has to be registered with AMFI and has to obtain a unique Registration Number. Once registered under AMFI, the mutual fund agent/distributor should follow the Code of Conduct and professional ethics of AMFI. The ARN acts as an identification card of mutual fund agents and distributors assuring unit holders that they are dealing with authenticated people in the market.
AMFI Registered Distributors (AMFRDs)
Mutual funds are sold in the market through various intermediaries known as mutual funds distributors. These intermediaries are expected to be highly knowledgeable and of high dignity and values. To foster these values in intermediaries, AMFI mandatorily requires all its intermediaries to obtain registration from AMFI and become AMFI Registered Distributors (AMFRDs). Thereby, only distributors registered with AMFI are allowed to deal with mutual fund products in the market. As per SEBI guidelines, the intermediaries should obtain the registration from AMFI after obtaining certification from the National Institute of Securities Market (NISM). This certification can be granted to the individuals with a minimum of 18 years of age and should pass the NISM test.
Committees under AMFI
AMFI formed various committees to gather expert knowledge and experience in various areas pertaining to the mutual fund industry. These standing committees will function in the best interest of the stakeholders. Following are the list of committees under AMFI:
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Financial Literacy Committee
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Operations and Compliance Committee
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Risk Committee
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Committee on Certified Distributors (ARN Committee)
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Equity CIOs Committee
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Valuation Committee (comprising fixed income CIOs)
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ETF Committee
Mutual Funds Sahi Hai
‘Mutual Funds Sahi Hai’ is one of the popular campaigns led by AMFI under the guidance of SEBI. Through this campaign, AMFI aimed to spread awareness of mutual funds amongst Indian masses in various languages. AMFI was successful in bursting various myths related to mutual funds and gained the confidence of masses.
Mutual Funds Sahi hai has its own website which encapsulates all the information related to mutual funds at one place. Thereby enhancing the knowledge of the general public and promoting confidence in mutual funds. The website disseminates vital information such as providing potential investors with the variety of mutual fund options, updating the performance of various mutual fund schemes on a daily basis, and a mutual fund calculator that allows potential investors to do their investments planning.
Frequently asked questions
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What is the difference between AMFI and SEBI?
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AMFI is dedicated to regulating the mutual funds market in India. Whereas, SEBI regulates the stock market in India. Though AMFI works under the guidance of SEBI, it is an independent body having its own vision and mission.
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What are the benefits of investing in a regulated market?
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A regulated market has a set of guidelines and code of conduct that must be adhered by all the market participants. The interests of the investors are always protected in such a market. As a result, a regulated market ensures fair, efficient and transparency in dealings thereby retaining the confidence of the investors.
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What are the objectives of AMFI?
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Following are the objectives of AMFI:
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To foster ethical and professional code of conduct in the mutual fund industry.
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To promote best business practices amongst the members, agents and distributors of mutual funds.
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To liaison with matters related to mutual funds with RBI, SEBI, and other government agencies from time to time.
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To create awareness amongst the investors on matters relating to mutual funds.
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To protect the interests of the investors and disseminate necessary information via authorized channels of communication.
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What is an AMFI Registration Number?
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The agents and distributors of mutual funds have to get themselves registered with AMFI to become an authorized dealer of mutual funds. Upon registration, they are provided with a unique ID known as AMFI Registration Number (ARN). It is a license issued by the AMFI to the distributors of the mutual funds.
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Who are AMFI Distributors?
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AMFI Distributors are agents or intermediaries that act as a link between the mutual funds industry and the investors thereby facilitating buying and selling of mutual funds. The AMFI distributors usually include banks, financial institutions, brokerage firms, and other authorized intermediaries.
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Why should investors be aware of AMFI Registration Number?
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Investors should be aware of the AMFI Registration Number (ARN) since only the registered distributors (AMFRDs) are authorized to deal with the mutual fund products. This will ensure investors are not getting scammed by any random person in the market claiming to be a seller of the mutual fund products. ARN also ensures that the distributor or intermediary has complete knowledge and expertise about the mutual fund.
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Can AMFI revoke the Registration Number?
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AMFI can punish intermediaries or distributors by revoking their registration number for the following reasons:
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Violation of the Code of Conduct.
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Severe conviction by a Regulatory Authority or Judicial Authority for serious offenses.
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Complaints filed in consumer court for gross negligence.
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What are the functions of AMFI?
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AMFI performs the following functions in the interest of the stakeholders at large:
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To provide education to investors regarding the mutual funds which would be in the form of articles, videos, infographics, and so on.
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To publish the performance of various mutual funds schemes on its website from time to time.
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To establish standardized guidelines and principles for the mutual fund companies thereby ensuring transparency and accountability.
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To take appropriate action towards the complaint filed against the mutual fund companies since AMFI is a self-regulatory organization (SRO).
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Explain AMFI NAV?
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The Net Asset Value (NAV) is a performance measurement tool of mutual funds. The NAV of a mutual fund scheme is expressed as a per unit basis. It is calculated by dividing the market value of securities by the total number of units in the scheme on a given date. The NAV of a mutual fund scheme fluctuates on a daily basis due to changes in the market value of securities.
AMFI has to publish NAVs of mutual fund schemes on a daily basis independent of mutual funds own daily publication. The NAVs published by AMFI on its website hold significant value in the eyes of the investors.
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How does AMFI educate its investors?
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The investors are regularly educated through infographics and other publications of AMFI related to mutual funds. ‘Mutual Funds Sahi Hai’ is one such prominent campaign of AMFI. Through this campaign AMFI conducts virtual programs in the form of seminars and workshops, as well as publishes online content in the form of infographics and videographics to educate investors about the mutual fund market.
Prachi Jain
Chartered Accountant
Prachi Jain is a Chartered Accountant with a passion for simplifying finance and tax-related matters through her insightful and informative blogs. With a background in finance and a deep understanding of tax regulations, Prachi has established herself as a trusted source of financial wisdom. Prachi is committed to empowering her readers with the knowledge they need to make informed financial decisions. Her expertise and dedication shine through in every blog post, helping her audience navigate the intricacies of finance and taxes with confidence. Follow Prachi Jain's blog for practical insights and guidance on managing your finances effectively.
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