The MF industry is not attracting as many new distributors as it used to a few years back. Data shows that new individual ARN registrations are on a decline for 3-straight years. From the peak of 20,339 in FY 2018, new ARN registrations came down to 5,601 in FY 2021.
In fact, the registrations in FY 2021 was the lowest in the last six years. The second lowest ARN registration count of 8,154 was seen in FY 2016.
In its draft IPO prospectus, Prudent Corporate Advisory said the ban on upfront commissions in 2018 resulted in the decline.
"The ban on upfront commission and drop in commissions paid by the AMCs has had substantial impact, especially on the small IFAs, as sustainability on previous cost structures became a challenge for the players," it said in the report.
"The move triggered consolidation in the industry and has also led to lower individual ARN registrations from fiscal 2019 onwards. The new individual ARN registrations plummeted by 51% on-year in fiscal 2020 and a further 35% on-year in fiscal 2021. As on March 31, 2021, there are 1.11 lakh ARN holders registered with AMFI," it added.
AMFI has been taking measures to boost new ARN registrations. In April this year, the mutual fund body announced a 50% cut in ARN registration and renewal fees. For individual distributors, the fee was brought down to Rs 750 from Rs 1,000. AMFI also provided relaxations to MFDs whose ARNs were due for renewal between March 15, 2020 and September 30, 2021. Their validity was extended till October 1, 2021.
