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A policeman in uniform automatically tend to command more respect than a plain-clothed one. Similarly, only a qualified mutual fund expert or distributor with an Application Reference Number or ARN code can sell mutual funds. Let’s understand the significance of ARN through the following topics.

  1. What is ARN code?
  2. Why is ARN code Required?
  3. How to get ARN code?
  4. Benefits of ARN Code

1. What is ARN code?

Every agent, broker or intermediary has to clear the NISM Certification Test and agree to abide by the mutual fund seller’s code of conduct. SEBI has laid down these guidelines so that the distributors comply with the undertaking mentioned in the application form. Senior citizens can attend Continuing Professional Education (CPE) to get the ARN.  Corporate companies too should apply for the same, if they want to venture into this field.

Individual intermediaries receive a photo identity card, comprising of the ARN code, address of the intermediary and validity period of the ARN. Corporates receive a registration letter with the ARN code, name of the corporate and validity of the ARN code, while their employees get EUIN card with similar details.

 

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2. Why is ARN code Required?

Everyone has heard the line, ‘Mutual Fund investments are subject to market risk’. However, that doesn’t mean one cannot reduce the risk by  more diligence. So, an intermediary has the obligation to inform and educate the investor about the risks involved. This will safeguard the interests of all the parties involved in the transaction.

SEBI and AMFI take several measures to ensure the safety of investors. One such step includes the mandatory procurement of ARN code for the distributors. For instance, Association of Mutual Funds in India (AMFI) has made it compulsory for all intermediaries involved in selling or marketing of mutual funds to clear a National Institute of Securities Markets (NISM) certification. After clearing the exam, they must register with AMFI to obtain AMFI Registration Number (ARN).

 

ARN

 

3. How to get ARN code?

AMFI relies on M/s Computer Age Management Services Pvt. Ltd. (CAMS) to process the registration and issue ARN on its behalf.

a. Intermediaries should apply in a prescribed form. It is available online as well as at the offices of AMFI and CAMS. You can also apply online from the CAMS online service.

b. Submit the application form along with knowing your dealer (KYD) acknowledgment. After filing the application for KYD, then the individual should present KYD application form in person.

c. The intermediary must submit NISM certificate copy, Aadhaar card copy, PAN card copy, bank account proof, and two passport size photographs.

d. The fee for individuals and senior citizens is Rs. 3540, including the GST. The fees and the documentation will differ for corporates and other entities. You can check the details here.

 

4. Benefits of ARN Code?

ARN code is crucial for both the intermediary as well the investor. ARN number is like an ID of the intermediary. Use it to track the assets mobilized by the intermediary. You can also use it to calculate the brokerage of the intermediary. Legally, an intermediary will become eligible to distribute mutual funds only after they have received the ARN number.

On the other hand, AMFI takes care to assure the investor about the credentials of any registered intermediary. They have to adhere to the ethical code set by the AMFI. Investors can leverage the ARN by changing the distributor. If a distributor is changed, the investor is not charged trail commissions resulting in long-term financial benefits to the investor.

 

ARN code

 

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