NISM Exam Preparation

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Chapter 6: Fund Distribution and Channel Management Practices

This chapter explores the distribution channels for mutual funds in India, the role and importance of mutual fund distributors, eligibility requirements, commission structures, and regulatory aspects of fund distribution. Understanding these concepts is crucial for anyone involved in mutual fund distribution or seeking to become a mutual fund distributor.

Chapter Summary

  • • Mutual fund distributors play a crucial role in helping investors build portfolios aligned with their financial goals
  • • Distribution channels in India include individual distributors, banks, national distributors, and direct AMC channels
  • • To become a distributor, one must obtain NISM certification, register with AMFI, and get empaneled with AMCs
  • • Distributors earn through trail commission based on assets under management
  • • SEBI has mandated the full trail commission model without upfront commissions
  • • Transaction charges and GST regulations apply to mutual fund distribution
  • • Special provisions exist for distributor code changes and nomination facilities