SEBI’s ‘new’ cadre of distributors have to pay Rs 3000 to get a mutual fund distributor’s license from AMFI.
After SEBI announced that it intends to rope in a ‘new’ cadre of distributors to increase the reach of mutual funds, AMFI has come out with a fee structure for these distributors which will be applicable from November 01, 2012. Individuals including senior citizens, postal agents, retired government and semi-government officials (class III and above or equivalent), retired teachers, retired bank officers with a service of at least 10 years in their organization and proprietorship firms have to pay Rs 3000 for getting mutual fund distributors license from AMFI.
The registration fee for existing class of distributors has been reduced by 20% across most categories of distributors while the renewal fee has been slashed by 50%. Many distributors had been demanding that AMFI reduce the renewal fee which was hiked in 2010. The reduction in ARN registration/renewal fee will bring some relief for distributors who have seen the economics of the business challenging since the regulator banned entry loads. Although there are roughly 40,000 KYD compliant ARN holders with AMFI, industry estimates suggest that only 10,000 are active. Industry defines active distributors as those who bring at least one application every month. It remains to be seen if the reduction in ARN registration fee will rope in new distributors.
“The idea is to go retail and penetrate in smaller markets. The new fee structure would help the industry,” said V Ramesh, Deputy CEO, AMFI.
The steepest reduction in fees has been for proprietorship firms and NBFCs. The registration fee for NBFCs has been drastically reduced by 80% from Rs 5 lakh earlier to Rs 1 lakh now and the renewal fee from Rs 2.50 lakh to Rs 50,000 now.
While AMFI has reduced the fees for all categories of distributors it has kept the fee structure for post offices unchanged at Rs 15000.
Earlier
all types of banks, be it private, or co-operative had to pay Rs 5 lakh. Now,
AMFI has introduced a separate category for regional rural banks, district central
co-op. banks that have to pay Rs 1 lakh for getting MF distributorship
license. Fund officials said that rural
banks were shying away from taking MF license because they felt the fees was
high.
For senior citizens, the fee has been reduced by 40% from Rs 5,000 to Rs 3,000. AMFI has introduced a new category for micro finance institutions for which the fee is Rs 15,000. Earlier, the fees for getting employees registration was Rs 5,000 for each employee, irrespective of the number of employees getting registered. Now, AMFI has relaxed the fees for employees to Rs 3000 and Rs 2000 for the incremental 101 to 200th employees and so on.
Revised fee structure
Do you think the reduction in ARN registration and renewal fee will attract more distributors? Let us know.
