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Mutual Fund Distributor (MFD) License Registration in India: A Complete Guide

A Mutual Fund Distributor (MFD) license, commonly known as AMFI Registration Number (ARN), is a mandatory certification required for individuals and entities to distribute mutual funds in India. Issued by AMFI and governed under SEBI regulations, obtaining an ARN involves passing NISM-Series-V-A exam and completing KYD verification. This registration allows individuals and entities to begin offering MF investment services and earn trail commissions.

For assistance in MFD license registration, you can get in touch with Registrationwala’s consultants. We will assist you in registration application filing with accurate details and necessary documentation, thereby increasing your chances of obtaining the approval from AMFI. 

What is a Mutual Fund Distributor (MFD)?

A Mutual Fund Distributor means a person/company involved in sales and distribution of mutual funds to prospective investors. They work on behalf of major asset management companies (AMCs) / Mutual Fund Houses. The MFDs play a quintessential role in the financial world by acting as an intermediary between investors and AMCs.

Each distributor of mutual funds must possess a mutual fund distributor license as a legal mandatory requirement. This license can also be called mutual fund distributors certification.

Why Do You Need an AMFI Registration Number (ARN)? 

AMFI registration number is required to legally act as a mutual fund distributor in India and ensure compliance with guidelines set by AMFI as well as SEBI. Once an individual/entity has this number, they can start selling and advising on mutual fund products to their clients. Additionally, the ARN helps the MFDs to build credibility and trust in the market.

Purpose of a Mutual Fund Distributor in India

The AMCs and MF houses in India work in association with the MFDs for the following purposes:

Benefits of Becoming a Certified MF Distributor

The benefits of becoming a certified MF distributor in India are as follows:

• The primary benefit of becoming a certified mutual fund (MF) distributor registered with Association of Mutual Funds in India is that it ensures full compliance with regulatory and legal requirements.

• Being a certified distributor of mutual funds, an individual/business finds it easier to build the trust of their clients. When clients know they’re in the right hands, they can make investment decisions with greater confidence as well as peace of mind.

• The MFDs get the chance to earn trail commissions based on the market value of their clients’ investments. As the market value of the client's investment grows, the MFD’s trail commission also gets increased. 

• It can be quite wholesome for an MFD to see the wealth of their investors grow as a result of informed guidance. 

• Compared to other businesses, the MFD business requires minimal infrastructure and physical space. It is ideal for those who want to start with low investment.

How does a Mutual Funds Distributor earn in India?

MFDs earn from the trail commissions that are dependent on the market value of their clients’ investments. They also earn from additional services like:

• Financial Planning Services for Investors

• Offering Basic Investment Advisory

• Managing Client’s Portfolio

• Aid in the Selection of Best MF schemes

• Investment Suggestions as per Client’s Investment Objectives

• Investments Monitoring services

• Generate Performance reports on Investor’s portfolio

Eligibility Criteria for MFD License 

To become an MFD in India, the applicant of MFD license India must meet the requisite pre-conditions as per the Securities and Exchange Board of India. They have defined them in the following pointers:

If you fulfill the mutual fund distributor eligibility requirements, then you can go ahead and initiate the application filing process.

Documents Required for Online MFD Registration

For Mutual Fund Distributor license registration, applicants must submit the necessary documents to further their candidature to the NISM. Therefore, we have detailed the required documentation for MF distributor license registration in India:

• A self-attested copy of the applicant’s documents, namely:

• PAN card

• Aadhaar Card

• Proof of Address like Passport,  Voter ID Card, Driving License or Other government-issued ID

• Proof of requisite Educational Qualification. At least 12th standard clearance is required to register as an MFD.

• Recent Passport Size Photographs

• Know Your Customer (KYC) details to aid in clearing their client’s identity

• Applicant’s Bank Account Details, such as the following:

• Canceled Cheque

• Bank Statement

• AMFI MFD license registration form

• MFC Licensing Fee receipt

Step-by-Step Registration Process (From NISM to ARN)

Below, we have defined the mutual fund distributor process for you. Once you go through them, you will be able to understand how to get mutual fund distributor license to start distributing MF schemes. :

Step 1: Attempting & Passing NISM Series V-A Exam

To become a mutual fund distributor, it is necessary to attempt and pass the NISM-Series-V-A: Mutual Fund Distributors Certification Examination. For this, you must first register on the NISM Online Certification System. Then, enroll in the examination. In the examination, there are 100 questions and each question carries 1 mark. 

There is no negative marking. To pass the examination, a minimum of 50% score is required. After passing the examination, you will receive a NISM MFD certificate that comes with a validity of 3 years. 

Step 2: Know Your Distributor (KYD) Process

You must now complete the Know Your Distributor (KYD) process. Completing this process is mandatory for the issuance of ARN by AMFI. The process involves filling out and submitting a KYD form, self-attested photograph and a bank document at a branch of CAMS POS (Point of Service).

Step 3: Obtaining ARN from AMFI

Once you complete the KYD process, you can begin applying for the ARN/MFD license via the official website of AMFI. You must file an application with required details and necessary documents. 

Accurate filing is essential to avoid rejection of your application. Once the AMFI approves the application, it’ll issue the AMFI Registration Number (ARN), which  acts as a unique license and allows you to sell the mutual funds. 

Step 4: Empanelling with Asset Management Companies

Once you’re an MFD with a valid ARN, you can start approaching mutual fund companies like SBI MF and HDFC MF for empanelment. 

Know Your Distributor (KYD) Compliance

KYD stands for Know Your Distributor, which is the verification process required before the Association of Mutual Funds in India (AMFI) can issue the AMFI Registration Number (ARN) to the applicant. This process is mandatory as it helps to verify identity & credentials of MFD in compliance with regulatory norms set by Securities and Exchange Board of India (SEBI). 

The KYD process involves In-Person Verification (IPV) at CAMS POS (Point of Service) branch. To avoid KYD rejection, the applicant must ensure their name and PAN details match exactly.

Why Choose Registrationwala for MFD License?

If you wish to become a Distributor of Mutual Funds in India, then you must seek the requisite MFD certificate from the AMFI. But the MFD certification procedure, as with many registration procedures, is a hassle for people not well-versed with such legal procedures. Here, Registrationwala comes in handy to you. 

The Legal Experts at Registrationwala can make you sail through the entire MFD certification procedure in no time. Let us take you through our MFD certificate consultancy procedure:

If you want to know more about the Mutual Fund Distributor licensing procedure, get in touch with us. Our MFD certification consultants can also brief you on other related matters like MFD registration fees and ARN validity.

Frequently Asked Questions (FAQs)