The mutual fund industry in India is largely supported by the Association of Mutual Funds in India (AMFI), whose main responsibility is to establish standards, provide transparency, and safeguard investors. This blog delves into the core of the regulation of mutual funds in India by discussing their nature, functioning, and their dynamic association with SEBI.
Find out exactly how to be an AMFI-approved distributor and who can register. Also, will you be smarter, safer, and more knowledgeable while working in mutual funds in India?
The Rise and Purpose of AMFI
AMFI was formed in August 1995 as a non-profit organization whose idea was to develop and enhance the Indian mutual fund industry. It has 49 Asset Management Companies (AMCs). Its mission is to maintain moral development, investor confidence, and a strong and regulated ecosystem of the market.
Pros and Cons of AMFI
| Pros | Cons |
| Investor education and awareness | Limited scope |
| Support for distributors | No statutory or enforcement powers |
| Coordination with SEBI | Disciplinary measures are mostly internal |
| Transparency and standardization | Potential conflict of interest |
Two Pillars of a Mutual Fund Regulations
The regulation of mutual funds in India is based on two pillars, which are statutory regulation by SEBI and self-regulation by AMFI.
- SEBI Authority: The highest level of regulation and enforcement is the SEBI Authority, which drafts and implements rules in the SEBI Regulations, 1996. It deals with the registration of AMCs, disclosures, and risk management, as well as investor grievances.
- Self-regulation at AMFI: AMFI is the conscience of the industry and ensures the code of ethics, educates investors, and punishes rogue distributors or intermediaries. AMFI, therefore, makes sure that the spirit of the law is observed faithfully by the members.
Interaction and Relationship of SEBI Vs AMFI
| Feature | SEBI | AMFI |
| Legal Status | Statutory regulatory authority created by the government | Voluntary, self-regulatory industry body |
| Scope | Regulator of the entire securities market, including mutual funds | Industry association for mutual funds only |
| Powers | Law-making, enforcement, investigation, and investor protection | Enforces the code of conduct, promotes best practices, and takes disciplinary actions against members |
| Functions | Regulates and supervises mutual funds and protects investor interests | Promotes ethical practices and industry representation |
| Regulatory Role | Legal oversight through SEBI Mutual Fund Regulations | Self-regulation and awareness campaigns |
| Relationship with the Other | Authorizes and supervises the industry, including AMFI and its members | Works under SEBI’s regulatory framework to uphold industry standards |
How Does AMFI Protect Investors?
The main purpose of AMFI to exist is to provide security to investors. AMFI shields investors by:
- Imposing some code of conduct on asset management companies, advisors, and distributors.
- Conducting investor awareness and education programs, usually in a variety of regional languages.
AMFI also empowers investors by putting the mutual fund companies in compliance with SEBI, keeping them in tune with the industry-specific challenges, and by adopting a more agile and peer-driven solution.
How AMFI Makes Investment Smarter?
AMFI has hundreds of workshops and online resources that make mutual funds understandable to you. Its advertisement campaigns, such as the one titled as Mutual Funds Sahi Hai encourage responsible, informed investment. AMFI fosters a culture of transparency and high trust, both among first-time and experienced investors, by publicly posting the names of suspended distributors and making educational resources available.
Who Can Register on AMFI?
Any one of you can register on AMFI and become a registered distributor if you have the following:
- Must be 18 years of age and an Indian citizen.
- A person who has passed the NISM-Series-V-A Mutual Fund Distributors Certification exam.
- Retired government/ semi-government officials with a minimum of 10 years of service.
- Retired teachers and bank officers with at least 10 years of experience.
- Agents engaged in financial product distribution like insurance, PPF, NSC, etc.
How to Register on AMFI?
Here are the simple steps to register on AMFI:
- Qualify by passing the NISM-Series-V-A Mutual Fund Distributors Certification exam.
- Prepare documents like proof of identity, address, NISM certificate, and passport photo.
- Fill out the AMFI registration application form online on AMFI’s official website or offline at CAMS offices.
- Upload required documents and pay the registration fee online or offline.
- Undergo the Know Your Distributor (KYD) verification process as per AMFI norms.
- Wait for AMFI to process the application, usually 15-20 days.
- Receive the AMFI Registration Number (ARN), valid for 3 years, enabling legal mutual fund distribution.
How to Check AMFI-Registered Mutual Fund Distributors?
Investor safety relies on dealing only with authorized mutual fund distributors. AMFI provides an open, digital portal to verify registration status:
- Visit AMFI’s official website and navigate to the Locate a Mutual Fund Distributor section.
- Search using distributor name, application registered number, or by applying region/ location filters.
- The system displays up-to-date details, including valid/ suspended/ invalid ARN codes, protecting you as an investor from unauthorized or blacklisted intermediaries.
- The portal also hosts lists of suspended or terminated ARNs.
The Future of Mutual Funds in India
The AMFI provides you with an effective, inclusive, and trusted mutual fund regulation in India through its association with SEBI. It is a tale of group development where all regulations are made to enrich the lives of not only institutions, but also all the households in India that are looking to develop through mutual fund investments.
Related: Explore How Automated Trading Is Shaping the Markets
Related: What Are the Benefits of Using an Economic Calendar for Trading?
Active Noon Media is the largest local to national digital media website that represents the voice of the entire nation.