Listen to this article
AMFI has reportedly requested SEBI to do away with the transaction charges in mutual funds, said two people aware of the development.
A senior MF official requesting anonymity said, “We have requested SEBI to discontinue levy of transaction charges by mutual fund distributors. The logic is simple: Rs.100 or Rs.150 is too less for MFDs. Since the market regulator is not going to increase it, it is better to do away with it.”
Recently, AMFI allowed AMCs to decide if they want to continue to offer transaction to distributors. In fact, PGIM India MF has discontinued the payment of transaction charges to distributors. This change was implemented from January 1, 2023. Also, Quantum MF doesn’t pay such a fee to MFDs.
Currently, opt in distributors can levy a transaction charge of Rs.150 for getting a new investor and Rs.100 from existing investors if they mobilize Rs 10,000 or above. In SIPs, transaction charge is deducted in 4 instalments starting from the second month provided the total commitment amount is Rs.10000.
In September, AMFI announced that it will suspend ‘opt in’ distributors who split application to charge transaction fee multiple times for six months from doing fresh business. In addition, AMCs will have to issue units of MF schemes in lieu of such deduction.
Currently, majority of distributors do not charge transaction fees. Many large distributors like banks usually ‘opt in’ to charge such a fee due to high business volume.
