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Yes, you can start distributing mutual funds after clearing the NISM Series V-A: Mutual Fund Distributors Certification and obtaining your AMFI Registration Number (ARN). The NISM certification alone is not sufficient.
After passing the exam, you must complete the KYD (Know-Your-Distributor) process and obtain your ARN from the Association of Mutual Funds in India. Only after completing all these requirements can you legally distribute or sell mutual funds in the country.
As you can tell from the name, a mutual fund distributor is an individual or entity that is engaged in distribution of mutual funds (MFs). In India, an individual cannot distribute MFs without passing the NISM-Series-V-A: Mutual Fund Distributors Certification Examination and having secured the necessary AMFI Registration Number (ARN).
In the case of a non-individual entity that wants to obtain an ARN to distribute MFs, there is a requirement of having at least one employee or sales personnel who has passed the above-mentioned NISM certification examination and is registered with the Association of Mutual Funds in India and has obtained an Employee Unique Identification Number (EUIN). This is required to be eligible for the allotment of an ARN.
To obtain the NISM certification, candidates must pass a computer-based exam consisting of 100 questions with a duration of 2 hours, and no negative marking. The minimum passing score is 50% in the exam. Once the candidate clears the exam, a certificate is issued to them by National Institute of Securities Markets.
This certificate comes with a validity period of three years and is used to apply for registration with the Association of Mutual Funds in India, in order to start distributing mutual funds. MFD certification ensures that the individual is suitable for the responsibility of MFD distribution. It showcases that they possess necessary knowledge regarding securities markets and protects the investors from mis-selling and incorrect information.
No, NISM certification for Mutual Fund Distributors alone is not sufficient. Apart from the certification, it is necessary to get AMFI Registration Number (AMFI) from the Association of Mutual Funds in India (AMFI).
To secure this registration, KYD (Know-Your-Distributor) verification is required. The applicant must compulsorily submit the application for grant of ARN online via the AMFI website.
Here is a general process you need to follow so you can start distributing mutual funds in India:
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Both individuals and non-individuals can become mutual fund distributors. You can check the eligibility criteria here.
If you want to build a career in the securities market, you can choose to become a mutual fund distributor. Below, we have mentioned some of the key benefits of becoming a distributor of MFs:
There is a potential for high income. The more clients and investments you bring to AMCs, the more you can earn. However, remember that income usually grows over time and not immediately.
Seeing your clients happy with the wealth they accumulate after investing in mutual funds through you can feel wholesome.
You earn commissions and may also receive incentives on the mutual fund products you sell.
If you choose to establish your own company for MF distribution, you get to be your own boss. Also, setup cost is low. All you need is a laptop with internet connection, certification from NISM and AMFI registration.
Below, we have mentioned some common mistakes you must avoid once you secure the MFD NISM certification:
After getting the certification, many individuals forget to apply for ARN. Don’t make this mistake. You need to keep in your mind that without the ARN, you cannot legally sell or distribute mutual funds in India.
Another mistake individuals tend to make is not having the complete list of documents required for ARN registration. This can lead to delays or rejection of the application.
It is necessary to be well-versed with the compliance requirements while applying for ARN. If you are not familiar with them, there are higher chances of rejection/ unnecessary delays in the approval process.
If you choose to establish your own mutual fund distribution business, you get to be your own boss. The setup cost is relatively low compared to many other businesses out there. MFD business does not require heavy infrastructure. You can get started with basic resources like a laptop, internet connection, certification from NISM, and AMFI registration.
You must secure the NISM certificate if you want to distribute mutual funds in India. However, it is only one of the requirements. You also need to obtain an AMFI Registration Number (ARN), for which completing the Know Your Distributor (KYD) process is necessary.
If you need assistance in obtaining AMFI registration number/MFD license, connect with Registrationwala.
Q1. Can I sell mutual funds after obtaining certification from NISM?
A. A certification from NISM is certainly important but isn’t enough. You must also obtain ARN from AMFI before you can begin selling MFs.
Q2. What is ARN in mutual fund distribution?
A. ARN stands for AMFI registration number. It is a unique alphanumeric code issued by AMFI to an individual/entity to authorize them to sell/distribute mutual fund schemes in India.
Q3. How long does it take to become a mutual fund distributor?
A. The answer to this question depends on how quickly you complete the required certification from NISM and the AMFI registration and documentation process.
Q4. Is registration mandatory after certification?
A. Yes, registering with AMFI is mandatory after obtaining certification from NISM. Without registration, you cannot distribute MF products in the country.
Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.
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