A mutual fund distributor (MFD) is a SEBI-regulated professional licensed to distribute mutual fund schemes to investors. MFDs hold an AMFI Registration Number (ARN) and earn trail commission from AMCs on the investments their clients make through Regular Plans. They serve as the bridge between retail investors and Asset Management Companies, providing advisory, transaction support and ongoing portfolio servicing for the life of the investment.

MFDs earn trail commission, an annual percentage of the AUM held by their clients in Regular Plan mutual funds. This commission is paid monthly by the AMC and continues as long as clients remain invested. As client portfolios grow through market appreciation and SIP contributions, the MFD's trail income grows automatically. Equity funds typically pay 0.20 to 1.50 percent trail per annum. From April 1, 2026, under SEBI's new Base Expense Ratio framework, commissions are paid GST-exclusive, meaning GST-registered distributors receive base commission plus GST, while unregistered distributors receive only base commission.

To start a mutual fund distribution business, follow three steps. First, pass the NISM Series V-A Mutual Fund Distributors Certification Examination, which is a 100-question, 2-hour exam with a 50 percent pass mark and a fee of around ₹1,500 plus GST. Second, apply for your ARN at amfiindia.com after completing the KYD process, with a registration fee of approximately ₹3,000 plus GST. Third, join a distribution platform like Wealthy.in for multi-AMC access, digital KYC and consolidated commission tracking. Total startup cost is under ₹10,000, and the full process typically takes 8 to 12 weeks.

Any Indian resident who is 18 years or older and has passed Class 10 can become a mutual fund distributor. There is no income requirement, no professional degree requirement and no prior finance experience needed. The only mandatory steps are passing the NISM Series V-A exam and registering for an ARN with AMFI. Salaried professionals, homemakers, retirees, LIC agents and fresh graduates are all eligible.

Two things are mandatory. First, the NISM Series V-A Mutual Fund Distributors Certification Examination, a 100-question exam conducted by the National Institute of Securities Markets (NISM) at centres across India, with a 50 percent pass mark. Second, an ARN (AMFI Registration Number) is applied for online at amfiindia.com after passing NISM V-A and completing the Know Your Distributor (KYD) process. No other certification is required to begin. For distributors expecting annual commission income above ₹20 lakh, GST registration is also mandatory, and from April 2026, registered GST status also affects how commission payouts are calculated.

A Mutual Fund Distributor (MFD) distributes Regular Plan mutual funds and earns trail commission paid by the AMC, not by the client. A SEBI-Registered Investment Advisor (RIA) charges the client a direct fee for advice and recommends Direct Plans. MFDs are regulated through AMFI under SEBI, while RIAs are directly registered with SEBI and face higher qualification, net worth and compliance requirements. Most practitioners in India operate as MFDs because the model is more accessible and better suited to the current market structure.

The SEBI (Mutual Funds) Regulations 2026, effective April 1, 2026, replaced the old Total Expense Ratio (TER) with a Base Expense Ratio (BER) model and moved statutory levies such as GST, STT and stamp duty outside the BER, to be charged on actuals. For MFDs, this means commissions are now paid GST-exclusive. A commission rate previously quoted as 1 percent inclusive of GST will now be paid as approximately 0.85 percent base, plus 18 percent GST, only to GST-registered distributors who submit valid tax invoices. The change effectively removes the GST arbitrage that unregistered distributors previously enjoyed and pushes the industry toward more professional, registered operators.

Mutual fund distribution works well in both modes. Many distributors start part-time alongside a full-time job, servicing friends, family and colleagues before going full-time once AUM crosses a meaningful threshold. The low entry cost, absence of inventory and digital-first workflow make it one of the few financial services businesses that can genuinely be run on the side in early years and scaled into a full practice over time. Many of India's most productive MFDs manage over ₹50 crore AUM entirely from home, serving clients across multiple cities.