AMFI is in the process of working out the modalities of a simple certification with NISM.
SEBI has asked AMFI to expedite the process of creating a new simplified route for broad basing the distribution force.
SEBI had identified postal agents, retired government and semi-government officials, retired teachers and bank officers, bank correspondents as the new cadre to sell mutual funds. These new cadres of distributors would require a simplified NISM certification and AMFI registration. AMFI is said to be in the process of finalizing the structure of this new certification with NISM. Details like minimum passing percentage, language, validity are also being worked out. The process of registering with AMFI for ARN is also being reviewed, according to industry officials.
These distributors will only be allowed to canvass simple schemes like diversified equity schemes, fixed maturity plans (FMPs) and index schemes having track record which equals to or is better than their benchmarks for each of the last three years. For simplifying this exam, NISM could do away with the negative marking for wrong answers or bring down the minimum percentage of mark from 60% to 50%. The curriculum could also be converted into regional languages. The KYD requirement could also be done away with.
While preparing a curriculum will not be a tall order, the challenge would lie in identifying these new cadre of distributors for which AMCs might have to do some ground work. AMCs could look at roping in distributors of public provident fund (PPF) and national savings certificate (NSC).
SEBI’s decision to expand the distribution force comes in the wake of declining active distributors in India. There were more than 80,000 ARNs registered with AMFI and the number came down to 40,000 after KYD was introduced. KYD is mandatory for selling mutual funds. Unofficial reports peg the active distributors count at 5,000 to 10,000
