Only qualified mutual fund experts and distributor with an Application Reference Number or ARN code can sell mutual funds. Let’s understand the significance of ARN through the following topics.
What is ARN code?
ARN refers to Application reference number. It is a unique number which is assigned to all the qualified mutual fund distributor or expert for trading in various schemes.
Why is ARN code Required?
Everyone has heard the line, ‘mutual fund investments are subject to market risk’ in the television advertisem*nt. However, that doesn’t mean one cannot reduce the risk by more diligence. So, an intermediary is obliged to inform and educate the investor about the risks involved. This will safeguard the interests of all the parties involved in the transaction.
SEBI and AMFI take several measures to ensure the safety of investors. One such step includes the mandatory procurement of ARN code for the distributors. For instance, the Association of Mutual Funds in India (AMFI) has mandated all intermediaries involved in selling or marketing of mutual funds to clear a National Institute of Securities Markets (NISM) certification. After clearing the exam, they must register with AMFI to obtain AMFI Registration Number (ARN).
How to get ARN code?
AMFI relies on M/s Computer Age Management Services Pvt. Ltd. (CAMS) for processing the registration and issuing ARN on its behalf.
- Intermediaries should apply in a prescribed form. It is available online as well as at the offices of AMFI and CAMS. You can also apply online from the CAMS online service.
- Submit the application form along with knowing your dealer (KYD) acknowledgement. After applying for KYD, then the individual should present KYD application form in person.
- The intermediary must submit a copy of their NISM certification, Aadhaar Card, PAN Card, bank account proof, and two passport size photographs.
- The fee for individuals and senior citizens is Rs.3,540, including GST. The fees and the documentation will differ for corporates and other entities. You can check the details here.
Benefits of ARN Code?
ARN code is crucial for both the intermediary as well as the investor. ARN number is like an ID of the intermediary. It can be used to track the assets mobilised by the intermediary. You can also use it to calculate the brokerage of the intermediary.
Legally, an intermediary becomes eligible for distributing mutual funds only after they have received the ARN number. On the other hand, AMFI takes care to assure the investor about the credentials of any registered intermediary. They have to adhere to the ethical code set by the AMFI. Investors can leverage ARN by changing the distributor. If a distributor is changed, then the investor is not charged trail commissions resulting in long-term financial benefits to the investor.
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