Two or three asset management companies (AMCs) may be enough for some mutual fund distributor (MFD) practices, but Indian rules do not prescribe that number. Treat it as a practical starting point—not a regulatory cap or proven optimum. The right panel is the one that can meet clients’ needs while allowing the distributor to assess suitability and provide reliable service.
Is there a rule that an MFD should work with only two or three AMCs?
No. AMFI’s current master-circular search result says distributors need formal empanelment with each AMC whose schemes they promote. It also reports that older common minimum empanelment criteria were deleted by an AMFI circular dated December 31, 2025. Neither point establishes a maximum or an ideal number of AMC relationships. See AMFI’s master circular and the related AMFI circular.
An ARN by itself does not authorize an MFD to promote every AMC’s schemes: formal empanelment with the relevant AMC is required. The available official sources do not establish that two or three AMC relationships produce better client or business outcomes than a broader panel.
When can a focused AMC panel make sense?
A smaller panel can be a sensible operating choice when it covers the scheme categories and service capabilities the MFD’s actual clients need, and the distributor can keep research, suitability review and follow-up under control. That is a practical decision framework, not a regulator-published scoring model or evidence-backed optimum.
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- Client coverage: Does the panel let you address the needs and objectives of the clients you serve?
- Due diligence and controls: Can you assess schemes and maintain clear controls that separate suitability evaluation from sales and relationship management? AMFI describes these organizational controls in its distributor due-diligence guidance.
- Service capacity: Can you reliably handle operational follow-up across the AMCs on your panel?
- Provider concentration: Does reliance on a small number of AMCs leave a material client need, coverage gap or continuity risk?
Expand the panel when a relevant client need cannot be met or when concentration creates an avoidable coverage or continuity problem. Do not broaden it just to increase the count.
How should commissions affect the decision?
They should not determine which scheme you recommend. SEBI’s June 26, 2002 circular reproduces the mutual-fund intermediary code of conduct: “When marketing various schemes, remember that a client’s interest and suitability to their financial needs is paramount, and that extra commission or incentive earned should never form the basis for recommending a scheme to the client.” The circular also warns against recommending an inappropriate product solely because it pays higher commission, and against churning investments to earn more. Read the SEBI circular as a historical reproduction of the code, not as a newly issued 2026 statement.
A narrow panel does not remove conflicts, and a broad panel does not by itself prove a conflict. The relevant question is whether a recommendation is based on the investor’s needs and suitability rather than commission or incentives.
How do MFD distribution and fee-based advice differ?
AMFI describes distributor-mediated investment as being in a Regular Plan, with commission paid by the AMC within regulatory expense limits. Its investor explanation says Direct and Regular Plans share a portfolio and manager but have different expense ratios. SEBI distinguishes MFDs, who earn commission, from Investment Advisers, who earn fees. These are different service and payment models; check current disclosures and rules when comparing them. See AMFI’s investor explanation.
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AMFI’s due-diligence page lists thresholds used by AMCs for due diligence of qualifying distributors: more than ₹100 crore of industry-wide non-institutional AUM raised (including HNIs), more than ₹1 crore in annual commission across the industry, more than ₹50 lakh in commission from one mutual fund, or presence in more than 20 locations. These are due-diligence criteria, not a recommended number of AMCs to work with; the page does not state a publication year.
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