What Is ARN Number in Mutual Funds? Meaning & Importance Explained

Imagine you are looking for an investment option that offers good returns while also easing management. What is the first thing that comes to your mind? Well, most of the investors will go for mutual funds. This is mainly because of their composition and the management by experts.

No matter what type of mutual fund you wish to invest in, you will get multiple options to find the best one. This is one of the reasons why every investor starting from a beginner to an expert, looks for this choice. But there are a few details that you need to know when investing in MF. One such detail is the ARN number.

Many people think that this is just a code. But this is more than that. It serves as proof that the distributor is authorized by the Association of Mutual Funds in India (AMFI) to sell mutual fund schemes. But there is more to it. So, read this guide to know all the details that you need. 

What is ARN?

The ARN number stands for the  AMFI Registration Number. It is a unique code issued by the Association of Mutual Funds in India (AMFI). This is given to mutual fund distributors, agents, and intermediaries. 

This number serves as an identification number. It confirms that the individual or organization is authorized to sell or recommend mutual fund schemes to investors.

In short, the ARN number in a mutual fund acts as a license for distributors. This allows them to operate legally in the mutual fund industry. By doing so, it also ensures investor protection through regulated selling practices. Every ARN holder must follow SEBI and AMFI compliance rules, making the entire investment process transparent and trustworthy.

Key Features of ARN Number in Mutual Funds

• It is issued by the AMFI.

• Every individual and corporate that is in the mutual fund business gets a separate ARN number.

• Lack of a valid ARN number means the sale of mutual funds will not be allowed.

• ARN holders must complete the Know Your Distributor (KYD) process.

• It comes with a validity period, which ensures proper management.

How to Get ARN Number in Mutual Funds

If you want to become a registered mutual fund distributor, getting an ARN number is a must. This is a simple process. It is regulated by NISM and AMFI, which ensures that there is security for the investors. Here are the steps that you would need to follow to become a mutual fund distributor in India.

1. Clear the NISM Certification Exam

Start by passing the NISM Series V-A. This is the basic Mutual Fund Distributors Certification Examination. This exam checks your understanding of mutual fund products. It also involves the check on the operations and investor servicing. Only after clearing it can you apply for the ARN.

2. Apply for ARN Registration with AMFI

Once certified, visit the AMFI or CAMS portal. Here, you would need to fill out the ARN application form. Submit the required details. This will include your NISM certificate number and contact information.

3. Complete the KYD (Know Your Distributor) Process

To confirm your application, you would need to complete the KYD. This will start with biometric verification. Then you would need to provide your identity proofs. These are PAN, Aadhaar, and a recent photograph. The main aim of the same is to ensure transparency and authenticity. 

4. Pay the Registration Fee

AMFI charges a registration fee. This will be based on the nature of the applicant. These include individual, company, or firm. You can pay it online while submitting your application.

5. Receive Your ARN Certificate

After successful verification, AMFI issues your ARN certificate. This document confirms your authorization to deal in mutual funds. It ensures that you are selling and recommending mutual funds after detailed knowledge and development of skills.

Importance of ARN Number in Mutual Funds

ARN is not just any number but a key aspect when it comes to mutual funds. It helps in maintaining trust and transparency in mutual fund distribution. It protects investors. This is also one of the important aspects that ensures only certified professionals guide them in investment decisions. Here’s why it matters:

1. Builds Investor Confidence

Investors can check a distributor’s ARN number. It is the registration with AMFI. This helps to verify their authenticity. This builds confidence. It also ensures that the same is legit in nature and dealings are made professional. This ensures mutual fund investment is safe.

2. Ensures Regulatory Compliance

An ARN holder must follow SEBI and AMFI rules. This ensures that there is no mis-selling or there is any wrong information that is being shared with the clients. This avoids the chances of fraud as well. It keeps the distribution network transparent and accountable.

3. Enables Commission Earnings

Distributors can receive commissions or brokerage only if they hold a valid ARN number. It acts as their official license to earn through mutual fund distribution.

4. Supports Investor Grievance Redressal

In case of disputes, investors can report issues to AMFI. With the help of the ARN number, they can highlight any concerns they have and avoid instances of similar issues in the future. This also helps to track and resolve the issues quickly.

5. Mandatory for Business Continuity

Without a valid ARN, a distributor cannot legally sell mutual funds. In fact, they cannot even renew their association with AMCs. This makes it essential for long-term business operations.

6. Better Suggestions Backed by Knowledge

Every investor has a different aim for investing. Some might be looking for the best mutual fund for children, while some might look for a retirement fund. When you have the ARN number and have cleared the exams, you are in a better position to evaluate and guide.

Difference Between ARN Number and EUIN

Many people confuse ARN and the EUIN number. While both are linked with the mutual fund distribution, they serve different purposes. ARN relates to the distributor or organization, while EUIN identifies the individual employee or advisor selling the product.

So, here are the key differences that you should know of:

Conclusion

The ARN number in mutual funds acts as a seal of trust. This is the sign that suggests that the distributor is verified and has passed the required exams to sell the mutual funds. This also showcases that the distributor is aware of all the rules and regulations that are necessary to safeguard the investors.

Hence,  obtaining an ARN number is the first and most essential step. So, if you are looking to get started, first secure this number and move ahead on this journey. And if you are looking for a trusted and ARN-verified platform for investing, check Rupeezy.

Get your mutual fund investment journey started with no issues and earn better returns.

FAQs

Who issues the ARN number in mutual funds?

The ARN number is issued by the Association of Mutual Funds in India (AMFI). It is done once the distributor passes the NISM certification exam and completes KYD verification.

Is ARN number mandatory for selling mutual funds?

Yes, a valid ARN number is mandatory. This is applicable for any individual or firm to sell or recommend mutual fund schemes to investors in India.

How long is the ARN number valid?

The ARN registration is usually valid for three years. Then it must be renewed periodically through AMFI’s continuing education program.

Can both individuals and companies apply for an ARN number?

Yes, both individual distributors and corporate organizations can apply for an ARN in mutual funds. But this is mainly based on the structure and eligibility.

How can investors check a distributor’s ARN number?

Yes, investors can verify the ARN number. This can be done by visiting the official AMFI website. This can help check whether a person or company has the required license to sell the mutual fund.