You have read about the Association of Mutual Funds in India (Amfi) and that it is a trade body, but do you know what it actually does?
A push for the industry
Amfi is an association of all the mutual funds (MFs) that operate in India, including foreign fund houses. In simple words, Amfi is a platform where all MFs come together and deal with the issues that the industry faces. Through its various circulars on a variety of domestic issues, such as the quantum and quality of disclosures or the process to approve or disapprove distributors and so on, Amfi standardizes various procedures that the industry follows. This means that if you visit, say, HDFC Asset Management Co. Ltd or DSP BlackRock Investment Managers Ltd, the basic process of investing in an MF scheme would remain the same.
As an industry body, Amfi has also taken up the role of spreading awareness about MFs. In the past year, it has conducted workshops in consultation with various fund houses. Lastly, it aims to bridge the gap between the fund houses and the capital markets regulator, Securities and Exchange Board of India (Sebi). For instance, If Sebi issues a new rule that appears a bit tricky to implement, Amfi consults fund houses and Sebi to ensure a smooth transition. It isn’t always successful, but over the past two years it has become more active.
Amfi’s other important function is to monitor distributors. Distributors are not yet regulated in India; Amfi merely monitors those selling MFs. To begin with, only those distributors who have an Amfi registration number are allowed to sell MFs. Though Amfi doesn’t regulate distributors, it has swooped down on those committing fraud and suspended licences, in some cases permanently.
Faced with accusation of being a club of top fund houses, Amfi last year expanded its board to 15 members, up from seven earlier. This allowed smaller fund houses such as Bharti AXA Investment Managers Ltd and ING Investment Management (India) Ltd to be on the board. Amfi has over the last two years tried to become more assertive. From the days when MFs ignored certain diktats of Amfi because they were not profitable for the fund houses, Amfi has gradually made progress.