AMFI extends deadline for MF distributor 'profiling'

MUMBAI: The mutual fund industry lobby, Association of Mutual Funds in India (Amfi), has extended the deadline for completing knowyour-distributor formalities by a month to April 1. So far, about 40,000 of the 1.10 lakh fund distributors have completed the KYD process, which includes submission of personal records, distribution business details and bio-metric profiling of the distributor, Amfi sources said.

Amfi’s KYD norms are also applicable for fresh advisory registrations and existing Amfi registration number (ARN) holders. Mutual funds have been asked to stop payment of commission to distributors who fail to complete the KYD process by March 31.

“We’ve extended the date to allow more distributors to be KYDcompliant ,” an Amfi official said. “We are very serious about stopping commission payment to noncompliant distributors. The other reason for extending the deadline is not to cause accounting problems for fund houses which will have to stop payment — commission for March — to noncompliant distributors ,” the source said. Amfi has set these KYD rules to increase agents’ accountability. According to Amfi guidelines, distributors — both independent financial advisors and distribution firms — will have to submit address proof, advisory business profile, pan card, bank statements, including a ‘name-bearing’ cancelled cheque and slides of bio-metric finger print to fund registrar CAMS.

Once the KYD process is completed, fund houses and investors will be able to verify the details of their agent before doing business with them. “From a compliance point of view, this is a good move as it introduces multiple screening of the distributor — the first one by the bank and second, by Amfi,” said Rajesh Krishnamoorthy, managing director, Ifast Financial, an online fund distributor.

“The KYD requirement will filter out advisors who are not serious about their business,” Mr Krishnamoorthy said. According to industry estimates, there are just about 50,000 distributors selling MFs, following the Sebi ban on entry loads. Cities, like Mumbai, Delhi and Nagpur, have seen a rapid decline in the number of financial advisors. Of the 10,000-odd ARN holders in Mumbai, only 2,000 are actively selling MFs in the city, industry sources said.