The first window of changing the status on transaction charge for distributors ends on March 25, 2013. The next window starts after six months from September 1st to September 25th. Hence, those wishing to change their status have to do so before 25 March or else they’ll have to wait till the next window opens.
SEBI introduced transaction charges of Rs 100/150 in August 2011 in order to compensate distributors. The transaction charge was initially allowed to be levied on all types of products and later in September 2012, SEBI allowed distributors to charge TC based on the type of the product.
Many distributors faced operational difficulties in charging for debt funds. Now distributors have a choice to opt in or opt out of TC from 11 scheme categories.
The option exercised for a particular category of scheme is applicable across all fund houses. AMFI shares the status of distributors regarding TC with all fund houses.
In order to prevent unfair practice, AMFI has warned distributors against splitting applications to earn more transaction charge. But the response from distributors opting in for transaction charge has not been encouraging. “I had earlier opted in but have opted out recently. It’s hardly any incentive for IFAs who operate on low volumes,” said Vinayak Sapre of VVS Ventures.
In 2011, around 6000 distributors were estimated to have opted in for TC.
Click here to download the option letter.
