The mutual fund industry has enrolled just 88 new mutual fund distributors in the individual category during June quarter due to the lockdowns in several states. Registrations have started picking up from June as test centres started opening. Association of Mutual Funds in India has started an online facility for obtaining new ARN licenses and renewing existing licenses.
Further, NISM has extended the validity for those who could not attend the certification examinations or CPE programmes from March 15, 2020 to September 29, 2020 till September 30, 2020.
New ARN registrations (Individual)
New ARN registrations (Corporate)
Even before the Corona pandemic, new ARN registrations were slowing down due to compression in margins and a ban on upfront commissions. In the individual category, new ARN registrations fell by 51% to 8,594 in FY20 from 17,625 in FY19.
As on June 2020, there are 1.04 lakh ARN holders including corporates, individual, senior citizens, and new cadre. The number of employee unique identity numbers (EUIN) stood at 1.22 lakh. EUINs are allotted to client-facing sales and advisory staff. Distributors need to ensure that the employees quote the EUIN in the application form for investments. This is done to trace any instances of mis-selling.
Fund officials say that apart from growing the distribution base, the industry needs to motivate existing distributors to get more productive. “Instead of adding new IFAs in the industry, we should look at how we can increase the productivity of existing IFAs. There are many IFAs who have not been able to scale up. The opportunity is there. It is just that they have to invest in their business,” says the CEO of a private sector fund house.
The industry needs more IFAs, especially in smaller towns, to ensure wider penetration of mutual funds. “The ARNs per million households in T15 cities are ~18 times higher than those in B15 cities. At the overall country level there are ~440 ARNs per million households. While the number in T15 cities is 4,300, it plummets to ~230 in B15 cities. This gap will have to be reduced quickly to meet the 100 trillion AUM aspiration,” says BCG AMFI report.
