Stringent distributor registration norms from Sept 1

From September 1, 2010, mutual fund distributors will be required to mandatorily furnish identity proof, address proof, PAN (personal account number) and bank account details and bio-metrics, as the Association of Mutual Funds in India (AMFI) lays down stringent know-your-distributor (KYD) norms.

In a mail sent to mutual fund house, AMFI has said that with increasing number of instances of financial frauds committed by mutual fund distributors and their employees, the mutual fund body at the behest of the Securities and Exchange Board of India (SEBI) has decided to tighten the procedure for distributor registration.

KYD norms will be applicable for fresh ARN (AMFI registration number) registration and ARN renewal effective from September 1, 2010. The existing ARN holders would be required to comply with KYD norms within 6 months -- by end of February 2011, failing which AMCs will suspend payment of commission till the distributors comply with the requirements.

AMFI will take the services of Computer Age Management Services (CAMS), which issues ARN to distributors, for the purpose of KYD including biometrics. Initially, CAMS would provide KYD facilities at 60 point of services (POS), which would later be expanded to more centres.

According to AMFI, CAMS has agreed to provide the facility on temporary basis at places other than these POS if requested by AMC and if the number of distributors is not less than 50. The details of POS will be uploaded on AMFI and CAMS websites shortly.

The distributors are required to produce, in person, the original documents for over the counter verification at the time of submission of their applications along with self attested photocopies of the same.

Bio-metric process
The bio-metric process involves taking impression of right hand index finger and registering the same for identification purpose. The process will be carried out at the CAMS POS, at the time of submission of applications for registration or renewal of ARN alongwith KYD application form.

Individual and senior citizen category distributors are required to visit in person for biometric registration. In case of non individual entities, bio-metric is required to be carried out for the authorized persons/officials. In case of proprietary concern, the proprietor; partnership firm, all the partners; Hindu undivided family (HUF), the signatory to the application; societies and trust, principal officer/chief trustee and the signatory to the application (if the signatory is a person other than these officials); corporates, authorised official who has signed ARN application will have to undergo the bio-metric process.

For the time being, AMFI would not to charge ARN holders for carrying out KYD process.