What is ARN in Mutual Fund? Meaning, Full Form & Importance

If you’ve ever looked into investing in mutual funds through a distributor, chances are you’ve heard of something called an ARN code. But what does it really mean? And why is it so important to understand ARN meaning in mutual fund ecosystem?

Let’s break it down so you understand what is ARN in mutual fund​, its full form, its significance, and how it affects you as an investor or distributor.

Why ARN Matters in Mutual Fund Distribution?

Every profession has its licenses and credentials. Just like doctors have medical licenses and lawyers need to pass the bar, mutual fund distributors in India need an ARN (AMFI Registration Number) to be eligible to sell mutual fund products.

A person or firm cannot legally advise or distribute mutual funds without this number. That’s how vital ARN is in maintaining trust, transparency, and investor protection.

Who Needs to Understand ARN and Why?

If you’re:

• An investor, ARN helps you verify your mutual fund advisor is legit.
• A distributor or financial advisor, ARN, is your official ticket to sell mutual funds.
• An organization or online platform, ARN ensures regulatory compliance with SEBI and AMFI.
  

In short, knowing the ARN full form in mutual fund​s and its practical use helps you navigate mutual fund investing with more confidence and security.

What is ARN in Mutual Fund?

Let’s begin with the basics. The ARN full form in mutual funds​ is AMFI Registration Number. It’s a unique code AMFI (Association of Mutual Funds in India) issued to individuals or organizations qualified to distribute mutual fund products in India. It’s sort of like a professional license for mutual fund agents. 

The ARN code in mutual funds is a 7-digit unique number identifying the distributor or entity registered with AMFI. Think of it like a PAN card number but for mutual fund agents.

If you’re asking, “what is ARN number in a mutual fund​,” you’re asking about this same identification code that allows someone to legally recommend and process mutual fund investments.

The ARN code in mutual funds serves as a distinct registration for distributors, similar to a PAN card for mutual fund agents enabling them to legally advise on what are mutual funds and facilitate transactions. 

Understanding this code is key when considering direct vs regular mutual funds, as it often distinguishes between advisors who earn commissions (regular) and platforms offering commission-free options (direct). 

ARN Meaning in Mutual Fund Transactions

Now let’s explore the meaning of ARN in mutual fund​ transactions.

Their ARN code appears on your transaction form whenever you invest through a distributor. It ensures that:

• The person handling your investment is registered and trained.
  
• There is accountability if anything goes wrong.
  
• You can track which distributor was involved in which transaction.
  

Why ARN is Important in Mutual Funds?

Let’s examine why ARN is not just a formality but a critical component of the mutual fund distribution system.

• Ensures SEBI-Registered Distributor Validity – SEBI (Securities and Exchange Board of India) requires only qualified and trained professionals to handle your mutual fund investments. ARN ensures that the distributor has passed NISM (National Institute of Securities Market) certification and is registered with AMFI.
• Protects Investors from Unregistered Intermediaries – By ensuring that distributors hold an ARN, investors are protected from fraudulent agents. This fosters transparency and confidence in the mutual fund space.
• Allows Tracking of Distributor Performance – The ARN code helps track the sales and service record of mutual fund agents. Fund houses can evaluate distributor performance, and AMFI can ensure proper conduct in the market.

Who Gets an ARN Code?

Not everyone can just walk in and get an ARN. There are certain criteria and categories.

Eligibility for ARN Registration

To get an ARN, a person must:

• Be 18 years or older
  
• Clear the NISM-Series V-A: Mutual Fund Distributors Certification
  
• Not be convicted of fraud or financial crimes.
  

Only upon clearing the exam and submitting relevant documentation can one apply for ARN.

ARN for Individuals, Corporations & Online Platforms

AMFI issues ARNs to:

• Individuals: Independent financial advisors
  
• Proprietorship Firms
  
• Partnership Firms
  
• Companies
  
• Online investment platforms
  

Validity Period and ARN Renewal Process

A distributor’s ARN code, crucial for engaging in mutual fund distribution, holds a validity of 3 years. To maintain their status as a stock investment advisor  and continue this activity, the distributor must undertake a renewal process upon expiry. 

This involves revalidating their NISM certification and submitting the necessary renewal documents to the Association of Mutual Funds in India (AMFI). Failure to adhere to this timely renewal may result in the suspension or even cancellation of their authorization to distribute mutual funds.

How to Apply for an ARN Code?

Applying for an ARN is a structured but straightforward process.

ARN Registration Process via AMFI requires the following steps:

1. Clear the NISM Mutual Fund Certification Exam
   
2. Visit the AMFI website or the CAMS portal.
   
3. Fill in the ARN application form.
   
4. Pay the required application fe.e
   
5. Submit the form with the necessary documents
   

Documents Required for ARN Code Application

You will need:

• NISM certificate
  
• PAN card
  
• Address proof
  
• Passport-size photographs
  
• Bank account details
  
• In case of firms: Registration documents, Board Resolution, etc.
  

How Long Does It Take to Get An ARN Code?

Once the application is successfully submitted, it generally takes 7–10 working days for the ARN code to be issued. You will receive a physical ARN certificate, an ARN card, and the login credentials to access the AMFI portals upon issuance.

How to Check ARN Number in Mutual Fund

You might now wonder how to check the ARN number in mutual fund​s?

Online Verification via AMFI Website

You can easily verify the ARN of any distributor through the AMFI website. Here’s how:

1. Go to the official website of the Association of Mutual Funds in India (AMFI) to access their comprehensive database of registered distributors. Look for the section designated ‘ARN Holders’ to begin searching for authorized mutual fund advisors.

2. Within the ‘ARN Holders’ section, you will find multiple search functionalities to locate distributors efficiently. One option is to directly input the unique 7-digit ARN number if you already have this information for a specific advisor or entity you wish to verify.

3. Alternatively, if you do not have the ARN, you can still search for a distributor by entering their registered name in the provided field. Furthermore, the AMFI portal allows you to narrow your search by specifying the city or state where the distributor operates, aiding in a more localized search.

How to Validate the ARN of a Mutual Fund Distributor?

Once you enter the details, you’ll see:

• Distributor’s Name
• Validity of ARN 
• Category (Individual, Corporate, etc.)
• EUINs linked to ARN
  

Always validate ARN before investing to ensure your money is in safe hands.

ARN vs EUIN: What’s the Difference?

Two codes often appear on mutual fund forms: ARN and EUIN. Let’s clear up the difference.

ARN – For Distributors / Agents

The ARN (AMFI Registration Number) identifies the entity or distributor registered with AMFI.

This could be a:

• Person
• Company
• Online platform
  

EUIN – For Individual Employee Under a Distributor

The EUIN (Employee Unique Identification Number) is for employees working under a distributor (like a bank or brokerage firm). So, while ARN identifies the company, EUIN identifies the specific employee who assisted in the transaction.

Why Are Both Codes Required in Transactions?

Including both ARN and EUIN ensures:

• Transparency – Including both ARN and EUIN ensures transparency by clearly identifying both the distributing entity and the specific individual providing advice, allowing for traceability of recommendations.
  
• Conflict-of-interest avoidance – This dual identification facilitates conflict-of-interest avoidance by making it easier to monitor biases at both the organizational and individual levels.
  
• Accountability for investment advice – Ultimately, it establishes accountability for investment advice, as investors and regulators can pinpoint who offered the guidance, promoting responsible practices and protecting investor interests.

This becomes especially crucial if disputes or allegations of mis-selling arise.

Conclusion

In conclusion, the ARN in mutual fund investing is crucial for both ethical and authorized distribution, serving as a key identifier for legitimate advisors. Verifying an advisor’s ARN is crucial to ensure investor protection and build trust within the mutual fund ecosystem.

Before investing, always check the ARN, ensure the EUIN is on the form, and avoid agents who cannot produce their registration. Utilizing an SIP calculator can help plan your investments, but transacting through valid ARN holders remains a fundamental step towards safeguarding your financial future and avoiding potential issues.

FAQs on ARN in Mutual Fund

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.