Mutual Fund industry in India is in a very nascent stage. Still growing, still evolving.
There has been various initiatives on various fronts and now the industry has reached close to Rs 8 lakh crore. Compared to the size of most developed countries and even countries such as China and Australia, we are much smaller in size.
When the Prime Minister took over the Finance Ministry from Pranab Mukherjee on his election as the President of the country, one of the first point the PM raised was that the mutual fund industry needs to be re-energised.
Before this there had been various discussions which culminated into a circular issued by the Securities and Exchange Board of India on September 13, 2012.
The most important aspect of this circular is the introduction of a new cadre of distributors and also the rule on Top-15 and Beyond Top-15 cities. Thus the thrust would be towards penetration of mutual fund products into smaller towns. To support this initiative, AMFI quickly took a decision to reduce the registration fees for individuals from Rs 5,000 to Rs 3,000 from November 2012.
Remember, the fees of Rs 3000 is for three years, which amounts to only Rs 1,000 a year. For the new cadre of distributors introduced, the fee prescribed is Rs 1,500 for three years. Here the fee is only Rs 500 per year. During the quarter Oct-Dec 2012, we saw more than 700 new registrations.
To give further impetus to the whole exercise, AMFI decided to provide a window during which we would waive off the fees completely making the registration free of cost. This would mean that any individuals either in the normal cadre or the new cadre can register themselves as a distributor for the first time free of cost during five months from February 1, 2013 to June 30, 2013. All required formalities for registration, like passing the required certification, etc, need to be completed for registration.
Under the new cadre, we have also included the following two categories:
Intermediaries/Agents engaged in distribution of financial products e.g. insurance agent, FD agent, National Savings Scheme products, PPF, etc registered with any other Financial Services Regulator.
The new cadre that has been announced is a very interesting move. This cadre is allowed to sell only performing Diversified Equity Funds, Fixed Maturity Plans and Index Funds. These category funds