4.4 Role and Function of AMFI

NISM-Series-V-A: Mutual Fund Distributors Certification Examination Exam

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1 Chapter 1: Introduction & Exam Overview

1.1 About the NISM-Series-V-A Examination 1.2 The 12-Unit Curriculum Map and a Study Plan

2 Chapter 2: Investment Landscape

2.1 Investors and Their Financial Goals 2.2 Savings or Investments? 2.3 Different Asset Classes 2.4 Investment Risks 2.5 Risk Measures and Management Strategies 2.6 Behavioural Biases in Investment Decision Making 2.7 Risk Profiling 2.8 Asset Allocation and Do-It-Yourself versus Professional Help

3 Chapter 3: Concept and Role of a Mutual Fund

3.1 Concept of a Mutual Fund 3.2 Classification of Mutual Funds 3.3 Growth of the Mutual Fund Industry in India

4 Chapter 4: Legal Structure of Mutual Funds in India

4.1 Structure of Mutual Funds in India 4.2 Key Constituents of a Mutual Fund 4.3 AMC Organisation Structure and Service Providers 4.4 Role and Function of AMFI

5 Chapter 5: Legal and Regulatory Framework

5.1 Role of Regulators in India 5.2 Role of SEBI and the Mutual Fund Regulations 5.3 Due Diligence Process by AMCs for Distributors 5.4 Investor Grievance Redress Mechanism 5.5 AMFI Code of Conduct for Intermediaries

6 Chapter 6: Scheme Related Information

6.1 Mandatory Documents I: Scheme Information Document and Statement of Additional Information 6.2 Mandatory Documents II: Key Information Memorandum and the Advertisement Code 6.3 Non-Mandatory Disclosures

7 Chapter 7: Fund Distribution and Channel Management Practices

7.1 The Role and Importance of Mutual Fund Distributors 7.2 Different Kinds of Mutual Fund Distributors 7.3 Modes of Distribution 7.4 Pre-requisites to Become a Distributor of a Mutual Fund 7.5 Revenue for a Mutual Fund Distributor 7.6 Commission Disclosure Mandated by SEBI 7.7 Distributors versus Investment Advisers, Nomination Facilities and Change of Distributor

8 Chapter 8: Net Asset Value, Total Expense Ratio and Pricing of Units

8.1 Fair Valuation Principles 8.2 Computation of Net Assets of a Scheme and NAV 8.3 Dividends and Distributable Reserves 8.4 Entry and Exit Load and Its Impact on NAV 8.5 The Expense Ratio Framework: Base Expense Ratio, Brokerage and Statutory Levies 8.6 Key Accounting and Reporting Requirements 8.7 NAV, Total Expense Ratio and Pricing of Units for the Segregated Portfolio

9 Chapter 9: Taxation

9.1 Applicability of Taxes in Respect of Mutual Funds 9.2 Capital Gains on Mutual Fund Units 9.3 Dividend (IDCW) Income and Tax Deducted at Source 9.4 Stamp Duty and Securities Transaction Tax on Mutual Fund Units 9.5 Setting Off Capital Gains and Losses under the Income Tax Act 9.6 Tax Benefit under Section 80C and Applicability of GST

10 Chapter 10: Investor Services

10.1 The New Fund Offer Process 10.2 New Fund Offer Price and Ongoing Offer Price for Subscription 10.3 Investment Plans and Services 10.4 Allotment of Units and Account Statements 10.5 Mutual Fund Investors: Who Can Invest 10.6 Filling the Application Form for Mutual Funds 10.7 Financial Transactions with Mutual Funds 10.8 Cut-Off Time and Time Stamping 10.9 KYC Requirements for Mutual Fund Investors 10.10 Systematic Transactions and Their Operational Aspects 10.11 Non-Financial Transactions, Special Investor Categories and Turnaround Times

11 Chapter 11: Risk, Return and Performance of Funds

11.1 General and Specific Risk Factors 11.2 Factors That Affect Mutual Fund Performance 11.3 Drivers of Returns and Risk in a Scheme 11.4 Measures of Returns 11.5 SEBI Norms Regarding Representation of Returns 11.6 Risks in Fund Investing: The Investor's Perspective 11.7 Measures of Risk and Provisions Relating to Credit Risk

12 Chapter 12: Mutual Fund Scheme Performance

12.1 Benchmarks and Performance 12.2 Price Return Index or Total Return Index 12.3 Basis of Choosing an Appropriate Performance Benchmark 12.4 Benchmarks for Equity Schemes 12.5 Benchmarks for Debt Schemes and Other Schemes 12.6 Quantitative Measures of Fund Manager Performance 12.7 Tracking Error and Scheme Performance Disclosure

13 Chapter 13: Mutual Fund Scheme Selection

13.1 Scheme Selection Based on Investor Needs, Preference and Risk Profile 13.2 Risk Levels in Mutual Fund Schemes 13.3 Scheme Selection Based on Investment Strategy 13.4 Selecting a Scheme Across AMCs or Within a Scheme Category 13.5 Selecting Options in Mutual Fund Schemes and Do's and Don'ts

4.4 Role and Function of AMFI

Key Takeaways Explain This Topic AI

AMFI is the industry association of SEBI-registered asset management companies, formed in 1995.

AMFI issues the AMFI Registration Number (ARN) that every mutual fund distributor must hold.

AMFI publishes the half-yearly list classifying stocks as large, mid and small cap.

AMFI prescribes the Code of Ethics for AMCs and the Code of Conduct for intermediaries.

AMFI is a self-regulatory-style industry body, not a statutory regulator; SEBI remains the regulator.

Last updated: August 2026

What AMFI Is

The Association of Mutual Funds in India (AMFI) was incorporated in 1995 as a non-profit industry association. Its members are the asset management companies of all SEBI-registered mutual funds in India.

AMFI is not a regulator . It has no statutory power to make binding law and cannot impose the penalties SEBI can. It functions as an industry body performing self-regulatory-style functions, several of which SEBI has delegated to it in practice. The distinction is examined: SEBI regulates; AMFI standardises, registers distributors and sets industry codes.

Registering Distributors: The ARN

AMFI's most visible function for a distributor is registration.

After passing the NISM-Series-V-A examination, an applicant applies to AMFI for an AMFI Registration Number (ARN) .

The ARN is the identifier printed on application forms and against which commission is paid by every AMC.

AMFI issues an Employee Unique Identification Number (EUIN) to employees, relationship managers and sales persons of a distributor, so that advice given can be traced to the specific individual who gave it.

ARN registration is renewable , and renewal depends on holding a valid NISM certification — obtained either by re-taking the examination or by completing the prescribed CPE programme.

AMFI also maintains the record of distributor empanelment and publishes commission disclosures at an industry level.

Standardising Market Capitalisation

SEBI's scheme categories depend on definitions of large, mid and small cap. AMFI operationalises these by publishing a list of stocks classified by full market capitalisation , updated half-yearly based on average market capitalisation over the preceding six months.

Classification Definition
Large cap 1st to 100th company by full market capitalisation
Mid cap 101st to 250th company
Small cap 251st company onwards

Every AMC must use this list, which is why a stock is large cap for the whole industry simultaneously rather than by each manager's judgement. Fund managers are given a defined window to realign portfolios after each revision.

Codes of Ethics and Conduct

AMFI issues two distinct codes that the curriculum names separately:

AMFI Code of Ethics (ACE) — principles for AMCs and trustees covering integrity, duty to unitholders, disclosure and management of conflicts.

AMFI Code of Conduct for Intermediaries — obligations of distributors , covering suitability, disclosure of commission, prohibition on rebating, avoidance of misleading claims, and confidentiality. Breach can lead to suspension or cancellation of the ARN.

The Code of Conduct is covered in detail in Chapter 5; note here only that it is an AMFI instrument and that AMFI, not SEBI, administers ARN suspension under it.

Other Functions

Valuation infrastructure. AMFI coordinates the appointment of independent valuation agencies that publish daily valuations for debt and money market securities used across the industry.

Industry data and NAV publication. AMFI publishes daily NAVs of all schemes, monthly and quarterly industry data on assets under management, folio counts, scheme-wise data and B-30 versus T-30 splits — the standard reference for industry statistics.

Benchmarks and standardisation. AMFI issues best-practice circulars standardising operational matters — application forms, transaction processing, risk-o-meter disclosure conventions, and stewardship reporting.

Investor awareness. AMFI runs national investor education campaigns funded by the mandatory contribution schemes make from their expenses towards investor awareness initiatives.

Representation. AMFI represents the industry to SEBI, the Reserve Bank of India and the Ministry of Finance on regulatory and tax matters.

AMFI Versus SEBI

Matter Responsibility
Registering mutual funds and AMCs SEBI
Making binding regulations SEBI
Approving trustees and scheme documents SEBI
Enforcement, penalties, adjudication SEBI
Registering distributors and issuing ARN / EUIN AMFI
Market capitalisation classification list AMFI
Code of Ethics and Code of Conduct for intermediaries AMFI
Industry data and daily NAV publication AMFI
Investor awareness campaigns AMFI, funded from scheme expenses

When an exam question asks who does something, the reliable test is whether it involves making or enforcing law — that is SEBI — or standardising industry practice and registering distributors — that is AMFI.

AGNI: The Operational Rulebook

Alongside the two codes sits AMFI Guidelines and Norms for Intermediaries (AGNI) , the operating rulebook every ARN holder accepts on registration. Where the Code of Conduct states principles, AGNI states what compliance looks like in daily practice: accurate representation of schemes, no rebating of commission, use of AMC-approved material only, maintenance of investor records, cooperation with AMC due diligence, and prompt assistance when an investor wants to complain. Breach is dealt with through AMFI's own disciplinary process, and the sanction available to AMFI is action against the ARN rather than a monetary penalty — a further illustration of the boundary between an industry body and a regulator.

Keeping the Registration Alive

AMFI's registration function carries a maintenance obligation that catches distributors out. The ARN must be renewed periodically, and renewal is conditional on holding a valid NISM certification . A NISM certificate is valid for three years , and it can be revalidated in one of two ways:

by passing the relevant NISM examination again before the existing certificate expires, or

by completing the prescribed one-day Continuing Professional Education (CPE or eCPE) programme, which may be taken only during the 12 months preceding the expiry date.

The trap is timing. Once the certificate has expired, the CPE route closes and the full examination must be retaken. An ARN allowed to lapse stops commission payments and blocks fresh business until it is restored, so the certificate expiry date belongs in a diary rather than in a drawer. The registration process itself is covered operationally in section 7.4.

What AMFI Does Not Do

AMFI does not register mutual funds, approve schemes, adjudicate investor complaints against an AMC, award compensation, or issue the NISM certification — that is NISM, an institution established by SEBI and separate from AMFI. A question that names AMFI as doing any of those things is testing exactly this boundary.