Mutual Funds
Revised mutual funds requirements will hurt independent distributors, enrich NISM

Independent mutual fund agents and distributors will now have to shell out more than double the amount in order to continue doing their business. Is NISM looking to needlessly increase cost of doing business for its own benefit?

Small mutual fund (MF) distributors and agents who rely on their certificates for doing business, will now have to shell out more than double the amount in order to keep the certificate, as the National Institute of Securities Market (NISM), and the Securities Exchange Board of India (SEBI) are making life tough for them. It costs, at the most, Rs3,600 for adhering to the new mutual fund requirement norms stipulated by NISM at a time when the business is dwindling. This move also enriches NSIM which has little or no contribution to spreading genuine financial literacy.

According to the communiqué issued by NISM around two months ago, the candidate can opt to get the certificate in one Rs1,800 per day per candidate, in case candidate opts for a single day training (i.e. the candidate chooses to complete the continuing professional education—CPE—for only one day at a time out of the two days of the CPE programme); or Rs1,700 per day per candidate in case candidate opts to complete both days training on two consecutive days of the two days of the CPE programme. A candidate with a valid NISM/ AMFI certificate is required to complete the mandated two-day NISM CPE programme within a period of 12 months preceding the date of the expiry of the said certificate.

This means, for a two-day course, the maximum the candidate will now have to pay is Rs3,600 (Rs1,800 x 2 days; two non-consecutive days) or Rs3,400 (Rs1,700 x 2; two consecutive days). Earlier it was Rs1,500 for just a one-day programme.

“NISM has unnecessarily hiked prices at their own convenience, for unknown reasons”, complain distributors. Because this is a regulatory requirement, advisors and certificate-holders don’t have any other choice but to shell out more. SEBI already squeezed them out with the banning of entry loads. Asset Management Companies (AMCs) usually reimburse the fees to their employees who take the exam.

Further, the communiqué said, upon expiry of the validity of the certificate possessed by an associated person, the certificate may get revalidated, provided the associated person successfully completes a programme of CPE, as specified by NISM during 12 months preceding the date of expiry of the certificate, or by passing the relevant NISM certification examination before the expiry of the existing certificate.

The funny thing is that one could fork over far less money for a fresh exam than attend two days of ‘training’. The NISM-Series-V-A: Mutual Fund Distributors Certification Examination, which is the main certification exam, costs just Rs1,000 NISM more, theoretically, the candidate can flunk the exam twice and still save money if the examination route is opted (Rs400 saved—assuming two flunks and a pass on third attempt). Also, previously, the candidate had to renew the certificate within six months from expiry. Now that has been elongated to 12 months from expiry. 

To provide a smooth transition, NISM will continue to offer the current CPE programme (the one-day programme) till 31 May 2012. An associated person holding a certificate whose validity will lapse on or before 30 November 2012 may undergo the current programme till 31 May 2012. Such a person holding a valid certificate whose validity will lapse between 1 June 2012 and 30 November 2012, and who has not undergone the above programme, may attend the NISM Mutual Fund Distributor (MFD) CPE as per the revised requirements from 1 June 2012 onwards, within the validity period of the said certificate. An associated person holding a certificate whose validity will expire on or after 1 December 2012 must undergo the NISM MFD CPE as per the revised requirements from 1 June 2012 onwards.

NISM performs two functions delegated to it under the SEBI (Certification of Associated Persons in the Securities Markets) (SEBI CAPSM) Regulations, 2007. These are:

1) Offering mandatory certification examinations for associated persons of securities market intermediaries. (i.e. NISM-Series-V-A: Mutual Fund Distributors Certification Examination)
2) Offering CPE programmes for associated persons of market intermediaries who are holding valid certificates. (i.e. NISM MFD CPE)

As per SEBI Notification Cir/IMD/DF/5/2010, since 1 June 2010, NISM MFD CPE programme has replaced the AMFI Refresher Course programme for the purpose of revalidation of NISM/ AMFI certificates.

Advisors are required to hold a NISM-MFD certificate in order to distribute mutual fund products and keep renewing them when they’re about to expire. NISM is a public trust, established by SEBI, the regulator for securities markets in India. According to the website, the board of governors of NISM include:

  • UK Sinha, chairman, SEBI (chairman, board of governors)
  • Prashant Saran, whole-time member of SEBI
  • PK Nagpal, executive director of SEBI
  • Uday Kotak, vice-chairman & managing director of Kotak Mahindra Bank
  • Chanda Kochhar, managing director & chief executive officer of ICICI Bank
  •   RM Malla, chairman & managing director of IDBI Bank
  •   Dr Anil Khandelwal, former chairman of Bank of Baroda
  • MS Sahoo, Advocate.

This isn’t the first time this kind of thing happened. Even AMFI had done it before, when it was in charge of issuing similar certificates, especially when they were losing ground to NISM (Mutual fund industry dealt another blow, AMFI hikes ARN fees). Is NISM looking to needlessly increase cost of doing business for its own benefit?




5 years ago

SEBI is a big bully. It demolished the upfront commission and reduced the trails. AFMI charges Rs.5000/- for new registration for ARN for 3 years. That is way steep. For ARN renewals it takes Rs.2500/-. AMFI just wants to make money by squezing IFAs. For becoming Life Insurance Advisor the fees are much less.
Organisations like NSE, NISM are just here to make money and very profitable. Why in financial services business every three years IFA need to renew the certification by paying fees? So that these people can make money. And the syllabus won't change every three years for mutual funds or equities.



In Reply to niraj 5 years ago

up to 10.06.2012 nism fees is 1500/- but from onward it will be 3500/-
reson they are hiring third party and period is for 2 days
making fool to distributer


5 years ago

Now, SEBI itself can be closed as they are not of use for a common investors - SEBI is there to support large corporates to make more money.

SEBI, always against IFAs and they will work against IFAs, as they want to show their power.

Nowadays. so many banks are selling MF units and how many of them have NISM certificates?

Ms. Chanda Kochchar should be removed from the Board of Governors of NISM as ICICI Bank is one of those banks selling MF units on a large scale and Ms. Chanda will definitely work against the IFAs so that banks can have a field day.


5 years ago

so the distributors should expect no increase in their operating expenses ? IFAs are entrepreneurs and should know how to handle their revenues and expenses. Let us not look at everything with dark glasses - it would be good to review NISM for their deliverables and pull up them where required, instead of grudging a hike of Rs. 300 to be amortised by the IFAs over a long period !

girish prasad

5 years ago

still people some ifa in not understanding the case .this is a sieving . by reducing upfront some ifa is removed . then by bringing KYD some are again removed .by doing above some more will be seprated..days are not so long when for every form ifa have to pay process charge entry charge amc govering charge etc and that you have charge to customer .that will be crushing time .
seems friction today ? wait then

R balakrishnan

5 years ago

First, let SEBI prescribe an exam for those who manage the money. This is merely a money making racket for NISM. Anyone who passes the exam does not become knowledgeable merely because of this. A compulsory license for the bus conductor, but none for the driver! SEBI zindabad



In Reply to R balakrishnan 5 years ago

Yes Balakrishnan you've hit the nail absolutely on the head

Mukesh Kamble

5 years ago

What abt other un-secured bonds sold by unprofessionals. My friend has been selling Twinkle Company Bonds (Coupon 13.5%) for last so many years without any certification or qualification. Why is the honest always punished??


5 years ago


Life Exclusive
Staff relations and discipline

Rewarding efficient employees and dealing with rebellious staff was part of the responsibilities at a garment factory. The 25th part of a series describing the unknown triumphs and travails of doing international business

Though I had visited Sri Lanka once before I joined Gulf Industries, I had no opportunity or even need to go there again while working with this firm, as our partner took the responsibility of selecting the staff and sending them to us for employment.  It was only required, when we built Finetex and it was Zubair’s way of delegating responsibility and ensuring that I get the best staff for our plant.
It took a month and half for me to know my staff; I observed them at close quarters; made my own notes on how they worked and what parts of the garment they were good at and so on.  Since it was a system of batch production, each component had to be done well and passed on to the next operator ahead who would then go to the next step in manufacture. Of course, each batch had its supervisor who was constantly on the move, checking, helping, correcting, so as to make every part of the garment perfect, so that, at the end of the line, a finely made garment would emerge!
I had mentally made up my mind to reward the workers; these would be in ad hoc payment, of a sum equivalent to SLR 750 (Sri Lankan rupees), which was the kind of amount many small factories would give as a start for its trainees for a whole month! Our prize proposal was simply for encouraging them to produce the very best. This was for various sections of the plant and this would be a permanent feature, month after month. Of course, the selected winners’ photographs would be displayed in the main production hall.
Zubair is one of the rare entrepreneurs who would welcome such innovative ideas. When I suggested this to him, all that he said was: “Why do you have to even refer this to me? You do whatever you feel best for the company”. A little later, I spoke to Piyasena and without announcing the details of the ‘prizes’, we simply publicised on the mike that we expect our staff members to take pride in their work and produce the best.
On the 7th of the following month, just before the morning tea break, we announced that a special appreciation for the good work done by the staff for the previous month will be made.
When they returned, the names of winners were announced and prizes in closed ‘envelopes’ were given. There was excitement and surprise and after a speech made by Perera; there was even more enthusiasm for the staff to be on the winners’ board the next month.  By the time lunch break out took place, the board was prominently displayed with the photographs of winners and their sections!
This was the first of its kind, introduced in not only in the Free Zone, but in the entire industry, operating in the UAE as well. We had not experienced any absenteeism and discipline was the very best that we enjoyed in our plant.
Mohammed, who had helped me during the interview process a few months earlier, and who was operating a plant in Shariah, was in the Free Zone to see his friends, after which he dropped unexpectedly in our plant. It was a pleasant surprise to receive this soft spoken ex-air force man, who was always friendly and nice. He had dropped in on a help mission and wanted my assistance urgently.
He explained that, due to recommendations made by his wife, he had met four young Sri Lankan girls in Karachi, who had come there on a ‘maid’s’ employment visa and were facing difficult working conditions, as a result of which they had simply “run away” from their jobs, and were doing odd jobs, and had landed in a garment factory. His wife had given them support and protection and somehow wanted them to get a break in a garment factory in Dubai! Since, it would take quite some time for him to get new visas for the staff in his plant; would Finetex give them an opportunity?
He had all the passport details, photographs and a description of what they were doing in the garment factory. After his wife made the recommendations, he had met them and came to know they were really good in their jobs and had picked up the operations well. Besides, they were able to speak Urdu well in the four years they had spent there.
It took less than a week for me to get them the visas and give them suitable jobs in our plant. In fact, Perera was more than pleased with their work, speed and finish. They worked for a good nine months or so and I had suggested to Perera that one of the girls, let us call her, Premawathy, be groomed to become a supervisor, because of her knowledge, work discipline, etc.
But, unfortunately, all too suddenly, during a random inspection by one of the Free Zone officials, she not only began to argue with him, but began to raise slogans about various matters and sort of challenged him to say that the workers must form a ‘union’ to protect their interests.  Regrettably, this word itself is ‘taboo’ in the Middle East and her utterances were not acceptable to the authorities. The three other girls, who had come with her, immediately jumped up in her support, and for the first time, we had a sort of rebellious situation in our plant, the like of which never happened before.
I always loved and respected my staff and to this day they reciprocate this feeling. But this was a situation that the Free Zone did not accept and did not want any other staff member to even dream. The gang of four were repatriated back to Sri Lanka on the first flight out of the country, by mid night of the same day.
I was back in Muscat and the garment factories were slowly coming up; we had quite a few visitors and dignitaries from leading business families who wanted to get into the business but were unwilling to invest; they wanted full control and a greater share of profits, which was not acceptable to interested parties from India, Pakistan, Sri Lanka and Hong Kong. The Philippine industrialists were happy building up their plants, and were not keen to invest overseas. China, of course, was expanding within the country itself.
Our shipments from Muscat also continued at great speed; and I was travelling back and forth; and we had a shipment of trousers, for a company called Habband, which was being made at both the plants. In order to coordinate the actual production and shipment details, I had come on the previous evening to Dubai and was in the plant, when Haji Cader called.
From his call, I realized that he had called Muscat and was directed to get in touch with me as I was in Dubai. There was an emergency, involving a staff member by the name, Ganga.  Her young daughter was in the General Hospital in Colombo, undergoing treatment and a surgery was likely. Haji did not know the details and it was due any time; was it possible for me to send her back urgently?
Even before I discussed the issue with Piyasena, I arranged for her booking and a definite seat (it was impossible to get seats in those days); but without her ‘pataka’ I would not be given the passport by the Free Zone!  All our staff had strict instructions to carry the pataka all the time when outside the camp; inside the factory, it was a ‘must’, and if any person was found working without this ID, they were liable to be punished, which included a fine. And I did not know whether Ganga was carrying her ID with her or not!
I called in Perera to my office, explained the situation to him and said, I have to carry out this ‘surprise’ inspection and check myself, because I have got some “secret news” from my friend in the Free zone that some officers were coming to the factory in the next half hour or so. This was our plan to get her pataka!
In the mock drill that followed, we called some 10-12 staff members to check their ID, praying that Ganga should not have hers with her! Eight of them had and four, including Ganga, had only the photocopy of the pataka, but not the original. With a warning, they were sent back to the camp in our van, and their patakas secured. As a ‘punishment’ we advised the four to stay back at the camp and told them their salary will be cut for the day (we never did that to any staff).
In the evening, both Perera and I called on her and explained to her the situation and that she would be met by Haji Cader at the airport early next morning. Her to and fro air passage was paid for by the company. All the members of the staff made a voluntary contribution and the company gave her a month’s salary to cover her absence. She rejoined some six weeks later, after her daughter had recovered completely. Our staff was always treated as a member of our own families.
Another member of the staff, who used to obtain urgent ‘supplies’ from the market was making a quick buck or two in preparing false invoices; and I found this myself when Perera asked me to get the materials, on my way to the plant. A quick check revealed that these items (like threads, lining materials, etc, had to be on our account, when we were doing “sub-contracting” jobs) were purchased regularly, while this driver was making the money. With the documentary proof I spoke to Zubair, who not only made the guy apologise to me, but removed him from our employment.
We loved our staff and stood by them. But we did not accept any deviation and indiscipline of any kind, for both us, work was worship. Period.
Any job opportunity was always first extended to our staff members and we had the lowest attrition in the entire industry. We remained the best employer in the industry.

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts. From being the advisor to exporters, he took over the mantle of a trader, travelled far and wide, and switched over to setting up garment factories and then worked in the US. He can be contacted at [email protected].)

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Life Exclusive
The race for the US presidency: The spirit of 2004

President Obama has been unable to get any significant reforms passed in the last year and a half. He will have to rediscover the political centre to keep his advantage among moderates. He will have to tap into the spirit of 2004

The United States of America is a country divided. Though president Barack Obama won the last election (2008) comfortably the two elections before that went right to the wire. George Bush won the 2000 elections against AL Gore where the difference between the two candidates was only the state of Florida and that too just a handful of votes. AL Gore, the democratic contender, actually won the popular vote but lost the electoral college after the Supreme Court stepped in, in the famous case of Bush Vs Gore which was decided on an ideological basis. The judges appointed by Republican Presidents decided for Mr Bush while the judges appointed by Democratic Presidents decided for AL Gore.
In the 2004 elections between George Bush and John Kerry, the difference was only the state of Ohio—a bellwether state. Actually the fact that America is equally divided may not be very new.
What is new is that the middle is falling through. There have always been red states (Republican) and blue states (Democrats).What is new is that the moderates of both the parties (mainly Republican) are a vanishing breed.
This has been particularly so after the rise of the Tea Party in the 2010 congressional elections. In these elections, the Republicans took over the House of Representatives in a landslide and reduced the Democratic majority in the Senate to a mere three seats. Writing in the Huffington Post a commentator states that the Republican Caucus in the House of Representatives in 2010 is the most conservative in over a hundred years. The moderates such as they are in a recent opinion poll prefer president Obama to Mitt Romney by a substantial majority.
Barack Obama broke into the national limelight at the Democratic Convention in 2004 when he was a candidate for the Senate seat in Illinois. The said convention anointed John Kerry as the Democratic contender. In the said 2004 speech Barack Obama stood out as a centrist. “Now don’t get me wrong. The people I meet—they don’t expect government to solve all their problems. They know they have to work hard to get ahead—and they want to go into our inner neighbourhoods and folks will tell you that government cannot teach our kids to learn. There is not a liberal America or a conservative America—there is the United States of America. There is not a black America and a white America and a Latin America and an Asian America, there is the United States of America. The pundits like to slice and dice our country into Red states and Blue states—Red states for Republican; Blue states for Democrats. But I have got news for them, too—we worship an awesome God in the Blue states and we don’t like federal agents policing around in the Red states.

There was great hope after the soaring rhetoric of 2008 that given his unusual biography he would able to unite America and reduce partisanship. He had in the 2008 elections made inroads in several conservative states. He redrew the electoral map of America. But very early in his term taking advantage of the fact that there was both a Democratic majority in the House of Representatives and the Senate, he pushed through his signature reform his healthcare bill seeking universal coverage for the people of America. Unlike Europe and Canada the USA does not have universal healthcare. Health insurance is very expensive and for many such as people with illnesses nearly impossible to get. A medical condition can break the back of the family. Hence the imperative of healthcare. President Obama, with great difficulty and much opposition, pushed through the Healthcare Bill. He did what Hillary Clinton and Bill Clinton had failed to do. But he spent an enormous amount of political capital in doing so. It fuelled enormous resentment in America and was labelled as socialized medicine.

Along with the rise of the Tea Party, it led to a debacle for the Democrats in the 2010 mid-term elections and the president has been unable to get any significant reforms passed in the last year and a half. He has struggled in getting his budget passed and the Tea Party seems to be on the ascendant.

President Obama has a 40% advantage over Mitt Romney among moderates through in the Poll of Polls last week where he and Romney were running neck and neck. President Obama will have to rediscover the political centre to keep his advantage among moderates He will have to tap into the spirit of 2004.
(Harsh Desai has done his BA in Political Science from St Xavier’s College & Elphinstone College, Bombay and has done his Master’s in Law from Columbia University in the city of New York. He is a practicing advocate at the Bombay High Court.)


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