A few AMCs have proposed to AMFI that distributors should get incentive for bringing new customers in mutual funds. They are of the view that the MF industry should discontinue incentivizing distributors for B-30 assets and shift its focus on incentivizing distributors for adding new customers irrespective of geographical location, said three MF officials who have made this proposal.
A CEO requesting anonymity said that SEBI has introduced B-30 incentives to improve penetration of mutual funds. However, incentivizing a few distributors at the cost of entire AUM is unfair.
He said, “Distributors work very hard to bring new clients to the MF industry. Be it a distributors working in Bareilly or a Bandra, both have to put similar efforts to acquire a new client. Hence, distributors should be incentivized based on addition of new clients irrespective of their physical location.”
Another MF official said that this practice will encourage distributors to bring new clients to the MF industry and serves the purpose of increasing mutual fund penetration in India.
However, the AMFI board is yet to discuss the proposal, confirmed two AMFI board members.
Currently, AMCs can charge additional 30 bps applicable on B30 cities only on assets from retail investors. SEBI rules say that retail investors are those who invest up to Rs.2 lakh per transaction. Fund houses can incentivize their distributors through additional B30 commission only through trail model.
