Tuesday, November 20, 2012

Distributors Fee reduced by AMFI


Welcome move from AMFI to boost for mutual fund industry

Since last 2 weeks I was out of city in my native place spending good time with family and relatives. It is very good sign that small city resident specially young generation investing in mutual fund. There are very good potential for growing mutual fund industry in near future. Only need is to spread awareness and benefit of investing in mutual fund with honest and ethics. There should not be miss- selling of product as it is very bad to grow for this industry.
SEBI has already taken a step to boost this mutual fund industry. Now one more good news for mutual fund distributors that Association of Mutual Fund  in India (AMFI) has reduced the registration fees for mutual fund distributors to increase the penetration of mutual funds and incentivize distributors beyond the metros.

The revised fee will be applicable from November 1. First time Individual Financial Advisors (IFAs) will now have to pay only Rs 3,000 for registration, compared with Rs 5,000 earlier. The renewal fees for existing IFAs is reduced Rs1500 from Rs2500 earlier.
In August SEBI created a new category of distributors which includes individuals like senior citizens, postal agents, retired teachers and other retired government officials who have been in service for at least 10 years in their respective organisations. The fee for this category has been fixed at Rs 3,000 per person.

The registration fee for NBFCs has been reduced by 80% from Rs 5 lakh earlier to Rs 1 lakh now and the renewal fee from Rs 2.50 lakh to Rs 50,000 now. Earlier all types of banks, be it private, or co-operative had to pay Rs 5 lakh as registration fee. Now, AMFI has introduced a separate category for regional rural banks, district central co-op. banks that have to pay Rs 1 lakh for getting MF distribution license.

Many distributors were demanding that fees be reduced as after the abolition of entry load, their income had reduced. Many market expert assume that this reduction in fee will lead to higher number of distributors entering in Tier-2 and Tier-3 cities which will benefit the industry over a period of time. This is in keeping with SEBI's aim to get more retail participation from beyond the tier-I and tier-II cities.
So overall it is good move from AMFI to increase retail participation form smaller and medium sized cities.

If you have any query regarding investment please feel free to ask.

Regards,
Arvind Trivedi
Certified Financial Planner

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