Different investment options, accessibility of mutual fund schemes, and the ability to start investing with just ₹ 500 have made mutual fund investments highly desirable for retail investors. According to February 2024 AMFI reports February 2024 AMFI reports, 84% of individual investor assets are in equity-oriented schemes. Such a large market needs to be regulated to ensure transparency and fairness of financial practices. 

The Security and Exchange Board of India (SEBI) has laid the groundwork for a mutual fund framework in India. An important entity that serves as a regulatory body is the Association of Mutual Funds in India (AMFI). 

In this blog, we will explore the roles, objectives, and importance of AMFI.

What is AMFI?

AMFI was incorporated in 1995 as a non-profit industry body of the Asset Management Companies (AMCs) operating with SEBI registration. It is established to ensure the mutual fund industry’s professional, ethical, and competitive functioning. 

AMFI is also one of the members of the International Investment Funds Association (IIFA), which includes fund associations of multiple countries. Investors can always find the latest and most accurate information about the MF market through AMFI. 

The mutual fund industry has several participants like AMCs, brokers, agents, issuers, etc. Most of the sales happen through mutual fund distributors (MFD). Investors approach distributors to choose the right investment option for them. So, AMFI wants to ensure that these MFDs possess the highest standards of knowledge. They must follow ethical practices to guide investors towards what is right for them. 

What is the AMFI registration number?

AMFI has a certification test that every distributor must pass to get their registration. Participants who are involved in selling mutual fund schemes must register with AMFI and get an AMFI registration number (ARN). 

The ARN is a unique identification number, and AMFI issues an identity card. All intermediaries like brokers, agents, and distributors who sell mutual funds for investors can get ARN. 

  • Anyone who is above 18 years of age can get a clearance certificate from the National Institute of Securities Market (NISM) to get ARN. If senior citizens want to get ARN, they must clear Continuing Professional Education (CPE). This ensures that they understand the latest norms of the industry.  
  • Once registered, it is valid for three years, after which the broker, agent or distributor must renew the ARN with essential documents. They can do this online or offline. Only those who have an ARN are authorised to sell mutual funds. 
  • Investors who choose mutual fund distributors with a valid ARN can invest confidently, knowing they are qualified and validated. You can also verify the credibility of the fund house through ARN searching. 
  • If AMFI finds any entity with ARN violating the code of conduct and AMFI regulations, they can revoke ARN registration at any time. 

Role of AMFI in Mutual Fund

The primary role of AMFI is to act as a regulator for the mutual fund industry in India. SEBI issues directions, and AMFI ensures that these are implemented. At every stage, it ensures that investor interests are protected while the industry progresses towards growth. 

In India, online platforms are crucial in making mutual funds accessible to retail investors. So, AMFI ensures that these platforms adhere to the rules and regulations laid out by SEBI. 

AMFI plays a key role in ensuring transparency of mutual fund transactions. AMCs must follow the best ethical business practices to continue to be associated with the body. 

Investors can find various resources from AMFI to make smart investment decisions. It also provides the latest and updated information about the market. 

Objectives of AMFI

AMFI strives to improve investors’ awareness of the safety of their investments. Its primary objectives are as follows:

  • Ensuring that AMCS and other parties selling mutual funds follow the defined standards. 
  • Safeguard investor interests.
  • Spread awareness about the mutual funds market.
  • Offer a portal for investors to address their grievances and complaints.
  • Protecting the interests of AMCs
  • Representing all matters associated with mutual funds to RBI, SEBI, government, etc. 
  • Ensuring that the mutual fund industry follows directions from SEBI 

To deliver these objectives, the AMFI has several committees, such as :

  • Financial Literacy Committee
  • Risk Committee 
  • Operations & Compliance Committee 
  • Committee on Certified Distributors (ARN Committee)
  • Valuation Committee 
  • Equity CIOs Committee 
  • ETF Committee

AMFI for Investors

Apart from acting as a regulatory body for the MF market, AMFI makes the market transparent for investors. If you are interested in mutual funds, you would have come across the Mutual Funds Sahi Hai campaign targeted to raise awareness about mutual fund investments. 

You can also find the net asset value (NAV) of all mutual fund schemes on the AMFI website. You can also download historical NAV data for 5 years to study the performance of MFs. Investors can also get performance details of MFs from the AMFI website. 

Apart from these, AMFI also publishes monthly data like the number of schemes in each mutual fund category, number of folios, funds mobilised, net inflow & outflow, net assets under management, etc. These details will help you understand all about the mutual fund schemes and make a wise decision. 

Conclusion 

Along with SEBI, RBI, and other government bodies, Association of Mutual Funds in India (AMFI) is crucial in keeping the mutual fund industry transparent and efficient. Investors can use the details on the AMFI portal to research the various investment options. All stakeholders, such as investors, MFDs, and AMCs, will benefit from the AMFI services that are updated constantly to reinforce ethical market practices.