Mutual fund distributors are unhappy about industry body Association of Mutual Funds in India's decision to hike registration and renewal fees 10-fold. They feel that the move could further undermine the growth of the mutual fund industry, which has already been hit by distributor apathy ever since the entry load for equity schemes was scrapped from August last year.
AMFI has hiked ARN or registration fees from Rs500 to Rs5,000 and renewal fees from Rs250 toRs 2,500 from 1 June this year. H N Sinor, chief executive of AMFI, told The Economic Times that the rationale behind the move was to ensure that mutual fund distribution is treated as a serious financial service.
''We found that often an individual authorised to sell mutual funds did not even know the features of the product. Some individuals had taken this up primarily to make money on the commission,'' he said, adding that AMFI has revised the charges after eight years. ''We will review it again after three years,'' Sinor added. He is also of the view that the move should also help curb ''misselling''.
With effect from 1 June 2010, the certification for mutual fund distributors is being managed by the National Institute of Securities Markets.
NISM is a public trust formed by capital market regulator Securities and Exchange Board of India (SEBI). Earlier, agents or distributors of MF schemes were required to obtain certification from AMFI by passing a certification examination. SEBI has now made it mandatory for mutual fund distributors to pass the certification test (advisors module).
According to AMFI, there were about 114,000 distributors certified by it in India as of 30 June 2010.