Sebi, Amfi incentives bring back mutual funds distributors

Sandeep Singh Posted: Jan 22, 2013 at 0135 hrs
Mumbai The mutual fund industry is showing signs of revival. There has been a significant rise in the number of distributors queuing up for renewal of their AMFI registration numbers (ARN).

According to Association of Mutual Funds of India (AMFI) data, renewals in December have shot up to 875 from around an average of 500 in the previous months.

The number of ARN renewals for the industry rose from 418 in October to 535 in November before jumping to 875 in December. The industry also witnessed more than 700 new registrations in the quarter ended December 2012.

While the growth in the markets and thereby a revival in investor sentiment is said to have played a role, the Securities and Exchange Board of India’s (SEBI) move in August to make the distribution business more attractive has also had an impact. In August 2012, Sebi allowed mutual funds to charge an additional expense ratio of up to 30 basis points if they bring at least 30 per cent of the total inflow from locations beyond top 15 cities.

“There is a trend emerging and people are slowly coming back. Over the last few months we have seen money coming through distributors who had registered long back but have done business for us for the first time,” said A Balasubramanian, CEO, Birla Sun Life AMC.

AMFI deputy CEO, V Ramesh, said that it is a good trend and seems to be a result of better revenues, growing market and also reduced cost for them as AMFI has reduced the ARN fee for distributors.

Beginning November 2012, AMFI had cut the registration fee for individual from Rs 5,000 to Rs 3,000 for three years and also reduced the renewal fee at 50 per cent of the registration fee.

The Association of Independent Financial Advisors seem to be a happy lot with the trend of a rise in inflow of new individuals in the business. Ramesh Bhat, president, IFA Galaxy, said that the higher charge of up to 30 basis points as per the new Sebi guideline has resulted into and inflow of new IFA’s and distributors to the industry as their income levels have gone up.

“While more people are currently joining the business from larger cities, they are also coming in smaller towns as asset management companies have taken initiatives to attract them in smaller towns too,” said Bhat.

Calling all

* Renewals rose from 418 in October to 535 in November and was up to 875 in December

* The industry witnessed more than 700 new registrations in the quarter ended December 2012

* After Sebi introduced no entry load in Aug 2009, several distributors had moved out