Table of contents
In May 2021, the mutual fund industry surpassed the milestone of having ten crore folios. In this gigantic sector, information is a strength regarding investments. Moreover, recognising what the ARN Number means can be similar to a secret ring in the complicated cosmos of mutual funds.
If you are a passionate investor who wants to navigate the world of funds or a distributor who wants to guide others, this article will take you through the mysteries behind ARN. It will discuss its definition, significance and how one can acquire it.
What is the ARN number in a mutual fund?
The Association of Mutual Funds in India (AMFI) mandates that all mutual fund distributors in India must have an ARN.
In mutual funds, the full form of ARN is “AMFI Registration Number.” But what does the ARN number in a mutual fund mean? In mutual funds, ARN means a unique number used to identify individuals. It also shows all transactions carried out by each investor through a distributor and the commissions paid by such clients.
The holder’s qualifications and competence are shown by ARN, which is an assurance to investors. A distributor receives a commission from every investment made by an investor in a mutual fund. It is only feasible if he has got this ARN code in place.
Who can apply for the ARN code?
The ARN is a unique number assigned to these entities based on their role as intermediaries in selling mutual funds. Those who can apply for ARN are:
- Independent financial advisers, brokers and agents engaged in marketing mutual funds may get ARN.
- Even bank staff or employees of financial institutions involved in mutual fund sales can apply.
- Sole proprietorship owners trading individually can possess a personal ARN number.
- Partnerships should apply for only one ARN covering each partner involved in MF distribution.
- A company, LLP or another corporate entity can request an ARN.
- Banks, NBFCs and other financial institutions allow individuals to have ARNs.
You may also like: Decoding NBFCs: Catalysts for financial inclusion and economic growth
How to get an ARN number in a mutual fund?
One has to follow the procedure AMFI set to have an AMFI Registered Mutual Fund Distributor (ARMFD) code, which intermediaries use to identify themselves as registered mutual fund distributors.
- Certification: The ARN number in the NISM mutual fund distributors certificate test must be passed by the Intermediaries. Registration with AMFI after certification is a SEBI directive that started on June 1, 2010.
- Registration: On passing the certification, the intermediaries must register with AMFI for their ARN code and an identity card.
- KYD process: AMFI has implemented the KYD (Know Your Distributor) process, which became applicable on 1st September 2010 and involves document verification and biometric registration. It should be done together with ARN registration.
- Unique identity for sales personnel: According to the SEBI circular dated 13th September 2012, sales personnel who deal with investors must also have an independent identity number and the distributor’s ARN.
These steps ensure intermediaries maintain high knowledge, attitude, and ethics standards and promote best practices in the mutual fund industry. The process aims to create a formal marketplace for selling mutual fund products, which would benefit investors and industry players.
Now you might be wondering, how to check the ARN number in a mutual fund or where can ARN number be found in a mutual fund. To find it, check your account statement or any transaction confirmation email.
Also read: Sustainable and Ethical Investing: Definition, importance and types
Benefits of the ARN code in mutual funds
For investors:
- Investor safeguard: An ARN Code is a measure that ensures that investors are provided with advice through qualified mutual fund distributors. It guarantees their interests by linking them up with well-informed professionals.
- Easy switching: Are you not happy with your current distributor? No worries! By having another mutual fund distributor with an ARN, an investor can shift smoothly to him or her. Their investments and other assets simply move elsewhere where other holders of ARN exist. The days of being stuck with an unsatisfactory distributor are over.
- Ethical standards: Mutual funds distributors must follow AMFI’s code of ethics. This moral structure safeguards the investors’ money and financial sources at large. Investors may be sure that their distributor abides by industry best practices.
- Assurance of knowledge: The ARN number for NISM mutual fund distributors is essential as it guarantees that a distributor possesses the certification and a good familiarity with mutual funds. It is like having a learned companion advising on what to invest in.
- Brokerage determination: The amount of brokerage which should be paid to the intermediary can be found by referring to the ARN Code. A customer will calculate all costs concerning his/her mutual transactions clearly without any doubts.
For mutual fund distributors:
- Distinctive identity: Each mutual fund distributor, advisor, or agent is provided with a unique identification number (ARN), which is used to differentiate them from the rest of the industry and to certify their position.
- Prerequisites for legality: Distributors can legally sell mutual funds to their clients if they hold an ARN code. It grants them access to the mutual fund distribution ecosystem.
Further reading: Mutual fund overlap – Meaning and effects
Bottomline
The ARN system is crucial to the entire mutual fund industry, encouraging openness, responsibility and confidence. It helps safeguard investor’s interests while allowing distributors to operate with trust and self-assurance. As the mutual fund industry expands, the ARN will remain an integral part of maintaining its integrity and creating a good investment climate.
FAQs
The fee for ARN (AMFI Registration Number) registration for an individual in India is ₹1,500. This fee applies to new registrations and renewals. Additionally, there may be a separate examination fee for obtaining the required certification from NISM (National Institute of Securities Markets), which is mandatory before applying for ARN. The ARN is essential for individuals looking to sell mutual funds in India.
The Association of Mutual Funds in India (AMFI) issues AMFI registration numbers (ARNs) to mutual fund distributors. This number ensures distributors are authorised to sell mutual funds and comply with regulatory standards. Distributors must pass the NISM certification exam to obtain an ARN. This number is used in all mutual fund transactions to track and credit commissions and ensures accountability and transparency in mutual fund distribution.
To find the ARN in a mutual fund, you can check the transaction documents or statements provided by the mutual fund company. The details of ARN are often mentioned on application forms, transaction slips or mutual fund account statements. On a different note, you can check with your mutual fund distributor or directly with the fund house, and they will tell you which ARN corresponds to your mutual fund investments.
The validity of an ARN (AMFI Registration Number) is three years from the date of issuance. After this period, ARN holders must renew their registration to continue distributing mutual funds. This process entails filling out the required application forms, paying the renewal fee, and providing any documentation that may be needed. It ensures that those who hold an ARN align with AMFI’s guidelines and regulatory matters.
The cost of renewing ARN (AMFI Registration Number) depends upon the type of registration and duration for which the renewal was made. Recently, the renewal fees of Mutual Fund Distributors (MFDs) ARNUIN (Association of Mutual Funds in India Unique Identification Number ) have been lowered by 50%. Moreover, fees for obtaining and restoring an Employee’s Unique Identification Number (EUIN) have been set at ₹500 for each employee. This move towards ethical standards and professionalising the industry.