AGNI
Also written AMFI Guidelines & Norms for Intermediaries · AMFI Guidelines and Norms for Intermediaries
AMFI Guidelines & Norms for Intermediaries — the code of conduct for agents, brokers, distribution houses and banks selling mutual funds, enforced by warning and then cancellation of AMFI registration.
In plain language
AMCs and trustees have their own code, the AMFI Code of Ethics. The people who actually meet investors — individual agents, brokers, distribution houses and banks — have another.
The workbook: AMFI has also framed a set of guidelines and code of conduct for intermediaries, known as AMFI Guidelines & Norms for Intermediaries (AGNI).
Its first line sets the tone: consider investor's interest as paramount and take necessary steps to ensure that the investor's interest is protected in all circumstances.
How it works
Enforcement — three steps (Chapter 10.3.2).
- AMFI writes to the intermediary, enclosing the complaint and evidence, and asks for an explanation within 3 weeks.
- If there is no explanation within 3 weeks, or it is unsatisfactory, AMFI issues a warning letter stating that any subsequent violation will result in cancellation of AMFI registration.
- On a proven second violation, the registration is cancelled and all AMCs are informed.
The intermediary has a right of appeal to AMFI.
What the code requires — the main groups.
| Area | Key obligations |
|---|---|
| Knowledge and information | Be conversant with the SID, SAI and KIM; give investors the latest SAI, SID, addenda, performance reports, factsheets, portfolio disclosures |
| Recommendation | Recommend schemes appropriate for the investor's risk profile and needs; highlight risk factors; no assured returns unless the SID is explicit |
| Commission | Disclose all commissions from competing schemes; no rebates or gifts; no inappropriate products for higher commission, no churning, no splitting of applications |
| Integrity of records | Use the investor's own address and contact details, never the intermediary's; never tamper with a form |
| Credentials | NISM certification, AMFI registration, EUIN for sales staff apart from the ARN; KYD compliance; diligent IPV |
| Conduct | No negative statements about other AMCs; confidentiality; no collusion in bouncing cheques or wrongly claiming dividend or redemption cheques |
| Documentation | Those meeting SEBI's due diligence criteria keep records for advisory or execution only services |
| Branding | Display the tagline "AMFI-registered Mutual Fund Distributor", in at least font size 12 in printed communication |
It also carries two provisions now overtaken: claw-back of upfront commissions on switches from Regular to Direct plans made after 1 January 2013, and a reference to transaction charges. The workbook's footnotes note that upfront commission and transaction charges have been discontinued.
A worked example
Manoj, an ARN holder in Kanpur, is the subject of a complaint. The dates are illustrative; the steps are the workbook's.
The violation. To "save the client trouble", he wrote his own mobile number and email into a client's application for Rs 2,40,000, and gave the client a Rs 1,000 gift voucher from his commission — two breaches: contact details must be the investor's own, and rebates or gifts are barred.
| Date | Step |
|---|---|
| 3 March | AMFI writes to Manoj with the complaint and evidence, asking for an explanation within 3 weeks (by 24 March) |
| 24 March | No satisfactory explanation received |
| 28 March | Warning letter: any subsequent violation will lead to cancellation of AMFI registration |
| Following year | A second violation is proven — Manoj again splits a client's investment into smaller applications |
| Then | Registration cancelled; all AMCs informed |
Manoj may appeal to AMFI. Cancellation ends his AMFI registration — and with it his standing as an AMFI-registered mutual fund distributor.
Why NISM asks about it
Chapter 10.3.2 (AMFI's Code of Conduct for Intermediaries of Mutual Funds) is the source, and the enforcement ladder is the most testable part: explanation within 3 weeks → warning letter → cancellation on a proven second violation, with a right of appeal to AMFI. Expect statement-based questions on the obligations — investor's interest paramount, no rebates, no assured returns unless the SID says so, EUIN for employees, the investor's own contact details.
Common exam traps
- AGNI is for intermediaries; the AMFI Code of Ethics (ACE) is for AMCs and trustees.
- 3 weeks to explain — not 30 days or 15 days.
- Cancellation needs a proven second violation, after a warning — not the first complaint.
- The appeal lies to AMFI, not to SEBI.
- Returns may not be indicated or assured unless the SID is explicit.
- Employees need an EUIN in addition to the firm's ARN.
- The upfront-commission claw-back clause is overtaken by the full trail model.
Where this is taught
- Series V-A · Chapter 4: Legal and Regulatory Frameworkintroduced here
- Series V-D · Chapter 4: Legal and Regulatory Frameworkintroduced here
- Series V-B · Chapter 10: Legal and Regulatory Environmentintroduced here
Related terms
- Mis-sellingSelling securities or securities services by knowingly making a false statement, hiding material facts or risk, or not taking reasonable care that the product suits the buyer — an unfair trade practice.
- AMFIThe Association of Mutual Funds in India — the association of all registered AMCs, which registers distributors through the ARN and sets codes of conduct, but is neither a regulator nor a self-regulatory organisation.
- AppropriatenessThe standard for advisory mutual fund sales: selling only the product identified as best suited for investors within a defined upper ceiling of risk appetite, with no exception made.
- AMFI Code of EthicsAMFI's code of good practice for AMCs and trustees, drawn up to supplement the SEBI code of conduct in the Fourth Schedule and set more explicit standards, from integrity to enforcement.
- AMFI Registration NumberThe registration number AMFI allots to a mutual fund distributor after NISM certification and KYD. It must be quoted on a client's Regular Plan transaction for commission to be paid.
- Know Your DistributorAMFI's verification process for mutual fund distributors — document verification plus a biometric impression of the right index finger, traditionally at a CAMS Point of Service — completed before ARN registration.
- Employee Unique Identification NumberThe number AMFI gives each certified employee of a mutual fund distributor. It is written on the client's application alongside the distributor's ARN, identifying the individual who sold the scheme.
- Full trail modelSEBI's rule that AMCs pay distributors only trail commission in all schemes — no upfront commission and no upfronting of trail, in cash or kind, through sponsorships or any other route.
- Execution onlyA mutual fund transaction not booked as advisory. If the distributor believes it is not appropriate, it needs a written unsuitability notice acknowledged by the investor and the investor's prior written confirmation.
- Self-dealingUsing your position inside a fund house to transact with the fund itself on terms that benefit you unfairly, at the expense of the scheme and its unit holders — banned outright by the AMFI Code of Ethics.