Mutual funds are believed to be one of the safest ways of investment to achieve financial goals. But there are some challenges and risks while investing in Mutual Funds, such as brokerage firm lobbying, issuer intention, morphing documents, and many more. Here comes the Association of Mutual Funds in India (AMFI) to the investors’ rescue.
AMFI is a statutory body under the SEBI (Securities and Exchange Board of India) committed to improving the mutual fund industry in India along ethical, professional, competitive, and moral lines. One of its major aims is to keep the investors informed about the happenings of the Mutual Fund market and protect investors’ interests.
Read the article to learn the origin and role of the Association of Mutual Funds in India.
Mutual Funds in India
The Indian Mutual Funds industry has witnessed significant growth from ₹7.68 trillion as of 31-Oct-12 to ₹39.50 trillion as of 31-Oct-21 (Source: AMFI). This growth has been possible due to the regulatory measures taken by SEBI in re-energizing the sector and the contribution of mutual funds distributors in raising awareness about the SIP.
What is AMFI?
The Association of Mutual Funds in India, or AMFI, is a dedicated regulating authority established to protect mutual fund investors’ interests and maintain the industry’s proper functioning. It is a non-profit organization in the Mutual Funds sector under SEBI. Since its incorporation in 1995, it has set various regulations to maintain ethics and transparency in the Mutual Fund industry for Indian investors.
Objectives of AMFI
AMFI has been incorporated with several objectives on hand. Some of them are mentioned below.
- To define professional and ethical standards to be followed in the Mutual Fund sector.
- To interact with the Securities and Exchange Board of India (SEBI) and report to them on all matters concerning the Mutual Fund industry.
- To represent all the regulatory bodies on all matters relating to the Mutual Fund industry.
- To aid in policing distributor behavior, including sanctions (cancellation of ARN) for Code of Conduct infractions.
- To increase financial literacy and help in increasing the penetration of mutual funds investment in India.
Role of AMFI
The Association of Mutual Funds in India (AMFI) is committed to advancing and maintaining mutual sector standards and promoting the Indian Mutual Fund Industry along moral and ethical lines. It aids in defending both the interests of asset management firms and Indian investors. Additionally, it helps to increase the accessibility and transparency of investments to draw in additional investors.
AMFI keeps an eye on the transactions to guard against investors being taken advantage of when they redeem their profits. It also helps increase awareness so investors can choose their investments more wisely. In order to maintain integrity, transparency, and investor interest throughout the entire mutual fund selling process, it also manages ARN registrations for private individuals.
Committees of AMFI
To ensure that AMFI fulfills all its objectives, it has formed several committees to delegate responsibilities. Some of these committees include
- AMFI Financial Literacy Committee
- AMFI Committee on Certified Distributors (ARN Committee)
- AMFI ETF Committee
- AMFI Committee on Operations, Compliance & Risk
- AMFI Valuation Committee
- AMFI Equity CIO Committee
What is the AMFI registration number?
The market concerning mutual funds is swamped with brokers, agents, etc. So, to ensure that individual agents, brokers, and other intermediaries conduct mutual fund selling with ethics and transparency, the AMFI ARN (AMFI registration number) registration is required in India. The ARN certification is valid for three years and can be renewed by giving essential documents. You should know that you can obtain ARN through both online and offline modes.
Why is ARN important to the investor?
ARN or AMFI Registration Number is a unique number issued to every mutual fund distributor/agent after passing a qualification test to ensure that only qualified people sell funds to prospective investors. So, before investing your hard-earned money, please cross-check the entity’s ARN number to make sure that you are dealing with a credible fund house.
Other Services of AMFI
- AMFI updates NAVs for mutual funds daily on its platform, allowing investors to view their fund’s current valuation.
- Historical performance data for mutual funds are available on AMFI’s site, facilitating investors’ performance analysis.
- The association streamlines finding mutual fund distributors by enabling searches with specific location details.
- AMFI circulates essential information via circulars and announcements, which is crucial for anyone involved with mutual fund distributions, enabling investors to gather important data on AMFI-associated mutual funds for informed decision-making.
Conclusion
In the recent past, mutual funds have become a popular investment option amongst Indian investors. Thus, it is important to protect the interest of investors, and AMFI is established with the same objective. It acts as a watchdog of the Indian Mutual Fund industry that not only protects investors but also promotes investments in mutual funds. Even though AMFI is here to protect you, as an investor, you should also be cautious and always check the entity’s credibility before investing. Happy investing!
FAQs
The Association of Mutual Funds in India (AMFI) was established to promote the mutual fund industry’s interests, protect mutual fund investors’ rights, and create a conducive environment for the industry’s growth. It sets ethical standards and best practices and undertakes initiatives to enhance investor education and understanding of the mutual fund investment process.
AMFI has 45 asset management companies (AMCs) registered with the Securities and Exchange Board of India (SEBI) as its members, acting as a unified voice for the mutual fund industry in the country.
No, AMFI is not a government body. It is a non-profit organisation that functions as an association for all the AMCs of SEBI-registered mutual funds in India. While it works closely with government bodies like SEBI, it operates independently to regulate and promote the mutual fund industry .
AMFI certification, symbolised by the AMFI Registration Number (ARN), is provided to mutual fund distributors, agents, or intermediaries. It signifies that the holder has passed the certification test and adheres to the ethical standards and practices set by AMFI. This certification is crucial for ensuring the credibility of mutual fund distributors and promoting informed and ethical selling of mutual fund products.
