What is an ARN Number?
ARN Number is the Application reference number or code that is allotted to a qualified mutual fund distributor or an expert who can use it to trade in various mutual fund schemes. Only a fund distributor or an expert who has been allotted an ARN (Application Reference Number) can sell or deal in mutual funds.
What is the need for an ARN number?
Mutual funds have the potential to substantially increase the wealth of the investor. However, they are also quite volatile and can drain the life savings of the investor too. It is, therefore, essential to have each aspect of this investment regulated by a competent authority, in this case, SEBI.
The requirement for an ARN was initiated by the Association of Mutual Funds in India (AMFI) with a view of engaging persons who sell or market the mutual funds to have the highest standards of knowledge and ethics. Agreeing with the importance of the need for quality and trustworthy intermediaries in the mutual fund investments, SEBI also mandated the need for ARN. Having a registered ARN will help in tracking the transactions by the distributors on behalf of the investors to safeguard their interests as well as uphold the standards of investing in a mutual fund. This will also help in building a sound mutual fund industry in India.
Who can apply for ARN Code?
The guidelines for getting an ARN code have been mandated by SEBI and AMFI. According to the guidelines in this regard, the eligible persons for getting an ARN are,
- Following persons with a minimum age of 18 years and having passed NISM (National Institute of Securities Market) Certification
- Individuals agents
- Other intermediaries engaged in selling mutual funds
- Senior citizens having attended Continuing Professional Education (CPE)
These applicants have to abide by the code of conduct and other undertakings as mentioned in the application form.
- Apart from the above applicants, ARN can be issued to corporates too who are engaged in the business of selling mutual funds. These corporates have to apply for the ARN with the AMFI and have to abide by the set code of conduct and other relevant undertakings as per the application form.
- It is to be noted that the registration for corporate entities has to be followed with an application for the registration of the corporate employee.
How to apply for an ARN number?
The prerequisite for the ARN code is the NISM certificate or the CPE certificate as the case may be. After obtaining the certificate, the application process for the ARN Number can be done online or offline as per the convenience of the applicant. The application process for each mode is detailed below.
The process for online application for ARN Code is given below.
- Visit the CAMS website and register on the portal
- The applicants need to get the ARN code application form which has to be submitted along with the KYD (Know Your Distributor).
- The KYD application form has to be submitted by the applicant in person as well.
- Following this, the applicant will have to submit the necessary documents to complete the application.
- The next step is to pay the requisite fees for getting the ARN code after which the Letter of Registration and a Photo Id will be issued and mailed to the applicant.
The process for offline application of ARN Code is given below.
- Visit the nearest office of CAMS and get the application form.
- Fill the application form with the requisite details and submit the same along with the necessary documents.
- After this, the applicant has to pay the fees for the ARN Code.
- Following this, the Letter of Registration and/or photo id will be sent to the applicant at their registered address.
What are the advantages of the ARN number?
The advantages of the ARN Code are mentioned below.
- The issue of ARN Code to the intermediaries assures the authenticity and the identity of the entity (individual agent, broker, mediator, distributor, etc.)
- The investors are assured against any case of fraud or scam as these intermediaries are regulated by SEBI and they have to adhere to the code of conduct.
- ARN code helps in tracking the investments made by the distributor and enlisted by the mediator.
- Another advantage of having an ARN number is the aid in calculating the brokerage of the intermediary.
Can ARN Code be renewed? What is the process?
The validity for the ARN Code once issued is for a period of 3 years. After the completion of this tenure, the registration can be further renewed by submitting an application for the same.
The renewal application has to be made 6 months before the completion of the validity of the ARN Code or subsequent to the completion of the said validity. If the renewal application is made prior to the occasions mentioned above, the validity of the ARN code would continue for the remaining period. If the renewal application is made after the expiry of the ARN code validity, the new ARN code will be valid from the date of submission of the renewal application till the date specified on the certificate.
The process for renewal is mentioned below.
- The first step is to download the renewal application form from the CAMS website or from the AMFI website.
- The applicant will have to fill this renewal application form and submit the same with the required documents.
- This application will also have to be accompanied by the requisite fees.
ARN Code is the primary requirement for the intermediaries for the distribution of mutual funds. ARN code also assures the safety of the investor’s interest and ensures that the distributors abide by the code of conduct set by AMFI and SEBI.
The validity for the ARN Code is 3 years.
Yes, the minimum eligible age to apply for the ARN code is 18 years.
The documents needed to apply for the ARN Code are,
a. Self-attested copy of the NISM certificate or the CPE certificate
b. Identity proof (copy of Aadhaar Card, Copy of PAN Card)
c. Bank account statement
d. Passport Size photographs
No. A distributor is not allowed to hold more than one ARN Code or letter of Registration.
The grounds for de-registering a registered intermediary are,
a. Violation of the code of conduct by such intermediary
b. On account of gross negligence which is upheld by any consumer court
c. On account of being indicted for serious offenses by a Regulatory Authority or any Judicial Authority.