ARN Code in Mutual Funds: Application, Requirement, Features & Benefits
The mutual fund sector in India has been witnessing a steep rise in recent years. The Association of Mutual Funds in India (AMFI), the nodal association of all the Asset Management Companies across India, is dedicated to developing the mutual fund industry on ethical and professional standards to promote best business practices.
As one of the measures to ensure the same, AMFI assigns an ARN code to every qualified mutual fund distributor or expert in India. This code is a crucial element in trading mutual fund schemes. So let’s understand what ARN code is in more detail.
What is ARN Code in Mutual Funds?
The AMFI Registration Number (ARN) is a unique alphanumeric code that is provided to every licensed distributor for trading in different mutual fund schemes. Only a qualified distributor or mutual fund agent can deal in mutual fund schemes.
Every mutual fund agent, dealer and intermediary must go through a National Institute of Securities Markets (NISM) certification test to qualify for the ARN code. Every intermediary is required to obtain the ARN code when dealing with mutual funds.
The ARN code follows a very specific format which comprises six components. This is an alphanumeric code, and the format is somewhat similar to this example:
ARN Code: BB 08 12 22 33333 2
Let’s look at the six different components of the code: Now, let’s see what the six different components of the code are:
BB – Alphabetical code
08 – State code
12 – Month code
22 – Last two digits of the year
333333 – Six-digit system-generated code
2 – Checksum digit
What are the Features of ARN Code?
Here are some salient features of the ARN code that you should know about:
- The minimum age to get the ARN code is 18 years.
- If you are an individual agent, broker, or intermediary, you can obtain the ARN code only by qualifying in the NISM certification test. Senior citizens can qualify for the same by clearing the Continuing Professional Education (CPE) test. Also, corporate entities can do so by applying to AMFI and agreeing to abide by the code of conduct and undertakings.
- Once approved, you will receive an ID card containing your information, such as ARN ID, name, photo, address, and validity period of the card. In addition, corporates will receive a Letter of Registration highlighting ARN ID, name of the corporate, and validity period.
- Employees will receive their Employee Unique Identification Number (EUIN) card, which will bear their name, EUIN ID, address and validity period.
- Certificates issued by NISM are valid for a period of three years. Letter of Registration for corporate bodies has the same validity.
- No distributor should own more than one ARN Code or ID.
- Intermediaries should contact the AMC for empanelment after getting their ARN Code. Only after they get empanelled, they can deal with their respective AMC’s mutual fund sales and business.
- A registered intermediary can get deregistered for violation of the code of conduct, complaints of negligence justified by consumer court and/or if being accused of grave offences by the Judicial/ Regulatory Authority.
What is the Importance of ARN Code?
Mutual funds are associated with different types of risks, and the returns are not guaranteed. The returns are primarily dependent on the performance of the underlying assets; moreover, the fund manager has a huge role to play when it comes to managing the mutual fund ethically.
Both the Securities and Exchange Board of India (SEBI) and AMFI have been continuously putting effort into making mutual funds an easy, reliable and accessible investment option for everyone. The ARN code is one such initiative by AMFI that helps make the whole investment process more transparent and lowers the discrepancies within.
The ARN process was incorporated to uphold the highest standards of ethics among the intermediaries while dealing in mutual funds. ARN code is only available to those who clear the NISM certification test, which verifies their expertise and legitimacy.
It is easier for the authorities to track transactions made by brokers and distributors if they have the ARN code. This helps in protecting the interests of both the intermediaries and the investors and supports the mutual fund industry in India.
How to Apply for ARN Code?
The primary eligibility criteria for obtaining an ARN code is to qualify for the NISM or CPE test (for senior citizens). After you clear the examination and receive the certificate, you can apply for this either online or offline.
AMFI relies on CAMS (Computer Age Management Services Pvt. Ltd.) for the process of issuing ARN codes.
Offline Application Process:
Here is an overview of the offline application process:
Step 1: Collect the application form from your nearest CAMS office.
Step 2: Fill in the application form and submit it along with KYD (Know Your Distributor) acknowledgement or KYD application form. You will be required to submit additional documents as well. .
Step 3: Pay the application fees.
Step 4: You will receive your Letter of Registration or Photo ID at the registered address.
Online Application Process:
Step 1: Visit your nearest CAMS office to obtain the application form, or you can download the form from AMFI’s official website. Registered users can also avail the application from the official CAMS website.
Step 2: Upload the filled-up application form on the CAMS platform, along with the KYD acknowledgement form and the required documents.
Step 3: Pay the required application fee and submit your application. Please note that you will also have to submit the KYD form in person as well.
Once approved, you will receive your Letter of Registration and Photo ID via mail after the authority issues the same.
Documents required for the ARN Application Process
You need to submit the following documents while applying for the ARN code:
- Copy of NISM/CPE certificate
- List of authorised signatories with specimen signatures for all categories of distributors except individuals, employees, senior citizens, microfinance institutions and LLPs.
- Copies of Board resolution, licenses issued by RBI, name and address details of the partners, etc., if applicable.
- Two passport-size photos for individuals, senior citizens and employees.
What are the Benefits of the ARN Code?
ARN code was introduced by AMFI, keeping in mind the transparency of operations and upholding ethics and standards. Have a look at these pointers to understand how ARN code is beneficial for the mutual fund sector:
- It acts as an identification for intermediaries, agents, brokers and mutual fund advisors. An intermediary becomes legally eligible to distribute mutual funds after obtaining an ARN code.
- It is easier to track the transactions of an ARN holder.
- It aids in determining the brokerage that an intermediary or advisor is entitled to basis of total assets or AUM managed by him/her.
- Investors get assurance that their agent or advisor is registered, qualified and will function according to the guidelines by AMFI.
- Investors are protected from scams or fraudulent activities.
What is the Renewal Process of the ARN Code?
The validity of the ARN code is of three years for any individual or corporate. After this validity period, you have to renew your ARN code. Here are some facts you should keep in mind regarding ARN code renewal:
- You should apply for renewal 6 months before the expiry date. The existing ARN/EUIN will continue to be effective for the remaining period.
- If you apply for renewal after expiry, the new ARN/ EUIN will be valid till the validity mentioned in the NISM/CPE certificate from the date of submission of the application.
Here is the procedure for the renewal of the ARN code:
Step 1: Download the application form from CAMS or AMFI website.
Step 2: Fill up the form and submit that with supporting documents.
Step 3: Pay the necessary fee to complete your application process.
The ARN code is a primary requirement for any individual or corporate body that wants to deal in mutual fund schemes. Apart from serving as a means of identification for the agent, distributor or broker, the ARN code also promotes a sense of security to the investors.
Frequently Asked Questions
What is the difference between ARN and EUIN codes?
When a corporate body registers itself with a mutual fund scheme, it receives a unique ARN code. Additionally, each employee of the corporate entity will receive a unique identification code known as the Employee Unique Identification Number (EUIN).
What is the fee for individual ARN registration?
ARN registration fee for individuals is Rs. 1770 inclusive of 18% GST, effective since May 2021. The registration fee for banks, NBFCs, LLPs, etc. differ, which you can easily find on AMFI’s website.
What is NISM?
National Institute of Securities Markets (NISM) is the educational arm of SEBI established in 2006. The primary aim of the institute is to promote education, research and training in the securities segment of India.