What is ARN Number in Mutual Funds? All You Need to Know

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What is ARN in mutual funds?

ARN in Mutual Funds: Introduction

Mutual funds can only be sold by licensed distributors and mutual fund specialists who have an Application Reference Number (ARN) code. Let's examine the following subjects to understand what is ARN no, and the importance of ARN through the course of this article. 

What is an ARN Number?

Each authorized distributor or mutual fund expert is given an individual number for use in trading in the schemes, known as an Application Reference Number (ARN Full Form). An ARN no. means that the intermediary is trusted and genuine. Asset Management Companies (AMC) must use this code while dealing with Fund Managers in the selling and marketing of Funds. The Association of Mutual Funds in India (AMFI) is responsible for allocating this code to each expert or distributor. The AMFI also provides a service on its website to locate the nearest arn verified distributor and goes by the name ARN Locator.

The ARN Code has a specified format that has 6 components. It is an alphanumeric code. Sample Code - BB 07 10 22 666666 2.

BB - Alphabetical Code

07 - State Code

10 - Month

22 - Year

666666 - Six digits system-generated code

2 - Checksum digit

Who gets an ARN Code?

  • All Mutual Fund brokers, mediators, and agents who have earned certification from the National Institute of Securities Markets are given the ARN Code (NISM).
  • Individual Intermediaries receive a photo ID card that includes their specific ARN Code, address, and ARN validity period.
  • Corporate organizations and individuals are provided with a letter of registration that includes the ARN code, the name of the person or organization, and the ARN's validity period.
  • Employee Unique Identification Number (EUIN) Cards with comparable information are given to company employees.
  • Seniors who have completed Continuing Professional Education (CPE), which obligates them to adhere to the application form's code of conduct

Why is the ARN Code Important?

Everyone has heard the television commercial line, "mutual fund investments are subject to market risk." But that doesn't mean one can't take greater precautions to lower the risk. Therefore, it is the intermediary's responsibility to inform and educate the investor about the potential hazards. The interests of all parties to the transaction will be protected in this way. To protect investors, SEBI and AMFI take a number of steps. One such step entails requiring distributors to get an ARN code. For instance, the National Institute of Securities Markets (NISM) certification is required by the Association of Mutual Funds in India (AMFI) for all intermediaries engaged in the sale or marketing of mutual funds.

The Association of Mutual Funds in India (AMFI) introduced the need for an ARN with the goal of requiring those who sell or market mutual funds to uphold the highest standards of expertise and ethics. SEBI established the requirement for ARN because it recognized the significance of the need for reputable and high-quality intermediaries in mutual fund investing. A registered ARN will make it easier to track the transactions made by distributors on behalf of investors, protecting their interests and upholding mutual fund investing standards. This will support India's efforts to develop a strong mutual fund sector.

How to get an ARN Code?

The NISM or CPE certificate, depending on the scenario, is required for the ARN code. Once the certificate has been obtained, the applicant can choose whether to apply online or offline for the ARN Number. M/s Computer Age Management Services Pvt. Ltd. (CAMS) handles the registration processing and ARN issuance on behalf of the Association of Mutual Funds in India (AMFI). Below is a description of each mode's application procedure.

Online Mode

Below is a description of how to apply for an ARN Code online:

  1. Obtain the CAMS website and sign up for the gateway there.
  2. To apply for an ARN code, the applicants must get an application form, which must be presented with a KYD (Know Your Distributor).
  3. The candidate must also personally submit the KYD application form.
  4. The candidate will then need to submit the required paperwork to finish the application.
  5. The required payments must be paid next in order to obtain the ARN code, and then the applicant will receive a letter of registration and a photo ID through the mail.

Offline Mode:

Below is an overview of the ARN Code offline application procedure:

  1. Get an application form by going to the CAMS office that is closest to you.
  2. Complete the application form with the essential information, and then submit it with the required paperwork.
  3. After that, the applicant must pay the ARN Code fees.
  4. The applicant's registered address will then get the Letter of Registration and/or photo ID.

The ARN mutual fund can be renewed as it approaches the expiry date. The ARN/Employee Unique Identification Number (EUIN) Code Renewal must be appealed no later than six months before the code's validity expires. The ARN/EUIN would continue for the remaining duration if the renewal is appealed before the validity period expires. The new ARN/EUIN code would be effective from the date of submission of the renewal application until the validity date mentioned on the NISM passing certificate / CPE Certificate if the renewal is appealed after the validity period has expired. For corporate ARN Code Holders, the renewal period is three years from the day the ARN renewal application was submitted.

Benefits of the ARN Code

  • An ARN in Mutual Fund is required for both the investor and the intermediary.
  • It serves as a means of identification for distributors, brokers, fund agents, and mutual fund advisors.
  • It makes it easier to track the assets accumulated by the intermediary.
  • It makes it easier to determine the intermediary's brokerage.
  • Due to the fact that these intermediaries are subject to SEBI regulation and are required to abide by a code of conduct, investors are protected from cases of fraud and scams.
  • An intermediary can legally distribute mutual funds after it receives an ARN Code.
  • Investors have the certainty that the intermediary is a registered Fund Advisor and will operate in accordance with the AMFI's code of conduct thanks to the ARN Code.
  • By switching distributors, investors can leverage ARN. The investor does not incur trail commissions in the event of a distributor change, providing them with long-term financial security.
  • What are the documents needed for applying for the ARN Code?

  • Is it possible for the registered intermediaries to be delisted on any grounds?

  • Can I apply for ARN without certification?