What is ARN in Mutual Funds?

ARN Number is the Application Reference Number or code that is given to a qualified mutual fund distributor or an expert, through which they can deal with several mutual fund schemes. Only a fund distributor or an expert who has been assigned an ARN (Application Reference Number) can deal in mutual funds. Those who pass the NISM certification exam are given an ARN code by the Association of Mutual Funds in India (AMFI). 

 

What is the Purpose of the ARN Number?

The need for an ARN was proposed by the Association of Mutual Funds In India (AMFI) to ensure that anyone who sells or markets mutual funds in India has the best standards of knowledge and ethical practices. Acknowledging the significance of the need for quality and trustworthy intermediaries in mutual fund investments, SEBI also made it necessary to have ARN.

 

The ARN number is thoughtfully crafted to provide significant information. An example of a typical ARN could be as follows:

07 10 24 666666 2 BB

Let's understand this:

• 07: The state code in which the distributor is located
• BB: These characters indicate the kind of distributor
• 10: The month in which the ARN was issued
• 24: The year of issue
• 666666: This is a unique number for that particular distributor
• 2: It ensures that the entire number is accurate

 

Who is Eligible to Apply for the ARN Code?

SEBI, which previously regulated demat accounts, has made guidelines required to obtain an ARN code from the participant with AMFI. Following persons with a minimum age of 18 years and possessing NISM (National Institute of Securities Market) Certification:

• Individuals agents
• Brokers
• Other intermediaries involved in the selling of mutual funds

In addition to the above, applicants who can be issued with an ARN include corporates who are involved in the business of selling mutual funds. These corporations have to apply for the ARN with the AMFI. They are also bound by the set code of conduct and other related undertakings as mentioned in the application form.

 

What are the Benefits of ARN Number?

The key benefits of the ARN code include the following:

• The ARN Code issued to the intermediaries guarantees the credibility of the identity of the entity (an individual agent, broker, mediator, distributor, etc.).
• The investors have protection against any act of fraud or scam as these intermediaries work under regulation from SEBI and they have to follow the code of conduct.
• ARN code enables identification of the distributor’s investments, including those enlisted by the mediator.

 

How Can You Apply for an ARN number?

To apply for an ARN code online, create an account on the CAMS website, fill out the ARN code application form along with the KYD form, and submit the required documents. After paying the necessary fees, you will receive a Letter of Registration and a Photo ID.

For offline applications, purchase the form from a CAMS office, complete it with the necessary documents, and pay the fees. The Letter of Registration and Photo ID will be sent to your registered address.

 

Understanding Demat Account Meaning

A demat account meaning refers to a type of electronic storage for financial securities such as stocks, bonds, and mutual funds. Investors are assisted in buying and selling mutual funds, which are then kept in the investor's demat account by mutual fund distributors who have an ARN number. This is why it is important to know the Demat account meaning and open a free demat account, as it helps you maximize your returns.

 

Conclusion

ARN in mutual funds encourages transparency, accountability, and investor protection. It also allows investors to track the transactions initiated by distributors on behalf of investors. Remember that your ARN is a symbol of your dedication to your clients and the industry, regardless of when you are obtaining or renewing it.