Who Is a Mutual Fund Distributor?
A mutual fund distributor sells schemes to investors and is paid commission by the fund house. This lesson explains what a person or firm needs before it can distribute, who may hold that registration, and what a distributor is not.
What a distributor does
A mutual fund distributor sells mutual fund schemes to investors and is paid commission by the fund house for doing so. Managing the portfolio is the asset management company's job, safekeeping of the securities is the custodian's, and scheme documents are filed with SEBI by the fund house.
Distributors may be individuals or organisations such as banks and companies.
What is needed before selling
A person must first pass the NISM Series V-A examination, the certification for mutual fund distributors, or Series V-D, which also covers Specialized Investment Funds. Only then can the person register with the Association of Mutual Funds in India (AMFI) and receive an AMFI Registration Number (ARN).
A distributor may appoint sub-distributors, but each must hold its own ARN. Nobody may sell under another distributor's ARN. An employee of a distributor is in a different position: the employee sells under the employer's ARN and holds an Employee Unique Identification Number (EUIN) of their own. An independent person has no such cover and needs an ARN.
What a distributor is not, and what it owes the investor
A distributor sells schemes and is not an investment adviser. It may give only incidental advice on the products it distributes; financial planning and advice on an investor's portfolio need registration with SEBI as an investment adviser, and an ARN does not confer it. Under AMFI's code of conduct a distributor may not use a title such as adviser or financial planner unless it holds that SEBI registration.
The same code sets duties. A distributor must describe itself as an AMFI-registered Mutual Fund Distributor, with its name and ARN, on its communications. It must disclose the commissions it receives, including those on competing schemes, and it should seek information about the investor's financial status, experience and objectives.
A distributor also does not take over the investor's risk or money. It may not pool investors' money or units in its own account, and the investor still bears the market risk of whatever is bought.
Rules at a glance
Three people who say they sell mutual funds (illustrative)
The first works at a bank branch. The bank holds the ARN, and she holds her own EUIN as its employee. This is in order.
The second works for himself. He has passed the NISM examination, registered with AMFI and holds an ARN in his own name. This too is in order. The third says he has no ARN and sells under a friend's ARN. That arrangement is not allowed: an independent person or a sub-distributor needs an ARN of their own.
Key points
- A distributor sells mutual fund schemes to investors and is paid commission by the fund house.
- A distributor needs NISM certification (Series V-A or V-D), AMFI registration and an ARN.
- Distributors may be individuals or organisations such as banks and companies.
- A sub-distributor must hold its own ARN; nobody may sell under another distributor's ARN.
- A distributor is not an investment adviser, and the investor bears the market risk of what is bought.
Common misunderstandings
- A distributor is not an investment adviser: it sells schemes and may give only incidental advice on the products it distributes, while financial planning and portfolio advice need registration with SEBI as an investment adviser.
- A sub-distributor does not work under the main distributor's ARN: each must hold its own.
- An ARN is not an assurance about any scheme: it shows that the seller is registered, and the investor still bears the market risk.
Questions people ask
Can an organisation be a mutual fund distributor?
Yes. Distributors may be individuals or organisations such as banks and companies. The organisation holds the ARN, and its staff who deal with investors hold EUINs.
Is passing the NISM examination enough to start selling?
No. The person must also register with AMFI and receive an ARN.
Who pays a distributor?
The fund house pays commission, mainly as trail on assets that stay invested, out of the regular plan's expenses, so an investor in a regular plan bears it indirectly through the scheme's expense ratio. A direct plan carries no distribution commission. The half-yearly consolidated account statement shows the commission paid in rupees.
What this lesson relies on
- AMFI Master Circular for mutual fund distributors (registration, ARN, EUIN and sub-distribution)
- SEBI Master Circular for Mutual Funds, 20 March 2026 (distributor commission and consolidated account statement)
- AMFI code of conduct for mutual fund distributors
- NISM Series V-A: Mutual Fund Distributors certification examination
- SEBI (Investment Advisers) Regulations, 2013
This lesson was reviewed independently against these sources on 8 October 2026. Rules change: check the current regulation, scheme document or policy wording before relying on any figure. This is education, not advice.