What is the importance of DDQ in MFD business ?
As per SEBI circular No. Cir/IMD/DF/13/2011 dated August 22, 2011, the Asset Management Companies (AMCs) are required to conduct due diligence in respect of mutual fund distributors (MFDs) . In this regard, AMFI has been organising unified due diligence of MFDs on behalf of participating AMCs by engaging the services of professional Chartered Accountants / consultancy firms, so as to avoid duplication of efforts by multiple AMCs and to ensure process efficiency. All distributors identified by AMFI on the basis of the aforesaid criteria, are required to undergo a unified due diligence.
Currently , DDQ is compulsory for those MFDs who meet any of the following criteria, in order to regulate the distributors:
a. AUM raised over ₹100 crore across the industry in the non-institutional category but including high net-worth individuals.
b. Commissionreceivedofover₹1croreduringtheyearacrosstheindustry. c. Commission received of over ₹50 lakh from a single mutual fund.
d. Multiple point presence in more than 20 locations.
However it is recommended for all MFDs to strengthen their business and grow it bigger and better !
