4.3 AMC Organisation Structure and Service Providers

How an AMC Is Organised

An asset management company is structured so that the functions capable of harming unitholders are supervised by people who do not report to the person doing them.

The Investment Function

• Chief Investment Officer (CIO) — heads investment management and sets the overall investment approach and process.
• Fund managers — responsible for specific schemes, making buy and sell decisions inside the mandate stated in the Scheme Information Document. Separate managers usually handle equity and fixed income, since the skills differ.
• Research analysts — cover sectors and companies for equity, and issuers and macro conditions for debt, generating the ideas fund managers act on.
• Dealers — execute the orders the fund managers decide upon.

Dealing is deliberately separated from fund management. The fund manager decides what and how much; the dealer decides how to execute and with whom. Separation allows execution quality and broker allocation to be reviewed independently, and prevents a manager from directing business to a favoured broker.

Control Functions

• Compliance officer — monitors adherence to SEBI regulations, the trust deed and the scheme documents. Reports to the board and the trustees, which is the point: a compliance officer reporting only to the business head cannot restrain the business head.
• Risk management — an independent function monitoring exposure limits, concentration, liquidity and stress scenarios. It has authority to escalate breaches irrespective of investment views.
• Internal audit — periodic independent review of processes and controls.

Operations and Support

• Fund accounting — NAV computation, segregated from fund management.
• Operations — trade settlement coordination with the custodian, reconciliation, corporate actions.
• Sales and distribution — empanelling and servicing distributors, and direct investor acquisition.
• Investor relations and service — grievance handling, coordination with the RTA.
• Marketing — with all communications subject to SEBI's advertising code.

The Structure in Outline

                 Board of the AMC (>= 50% independent)
                             |
                    Chief Executive Officer
     +-----------------+-----+------+---------------+
     |                 |            |               |
    CIO           Compliance      Risk         Operations
     |            Officer *     Management         |
  Fund managers                                Fund accounting
  Research analysts                            RTA coordination
  Dealers (separated)                          Investor service

  * Compliance also reports independently to the Trustees

Service Providers Around the Fund

Beyond the constituents in the previous section, a mutual fund depends on a wider ecosystem.

Credit rating agencies — SEBI-registered agencies such as CRISIL, ICRA, CARE and India Ratings assess the credit quality of debt instruments. Ratings feed directly into what a debt scheme may hold, since several categories carry rating-linked investment restrictions, and a downgrade has immediate consequences for valuation and sometimes for continued eligibility.

Valuation agencies — for debt and money market securities, which trade infrequently, valuation cannot rely on market prices alone. AMFI-appointed independent valuation agencies provide daily security-level valuations used by all funds, so that identical securities are not valued differently across AMCs. This is the practical mechanism behind fair valuation.

KYC Registration Agencies (KRAs) — SEBI-registered entities that hold and share investor KYC records across intermediaries, so an investor completing KYC once can transact across the securities market. The Central KYC Records Registry (CKYCR) operates a parallel repository across the wider financial sector.

Depositories — NSDL and CDSL hold dematerialised units and securities and support exchange-based transactions in mutual fund units.

Stock exchange platforms — BSE StAR MF and NSE MFSS allow distributors and brokers to place mutual fund transactions through exchange infrastructure.

Payment infrastructure — banks, payment aggregators, the National Automated Clearing House mandate system that powers systematic investment plans, and UPI-based collection.

Proxy advisory and stewardship — AMCs must vote on investee company resolutions and disclose their voting along with rationale, so proxy advisory research supports the stewardship obligation.

Why This Matters for a Distributor

A distributor rarely deals with a valuation agency. The reason the syllabus includes this material is that when an investor asks why a debt scheme's NAV moved on a day when nothing traded, or how the same bond is valued identically across two fund houses, the answer lies in this infrastructure. A distributor who can explain that independent agencies value debt securities daily for the whole industry gives an answer that is both true and reassuring — which is a better outcome than an improvised one.

Governance Inside the AMC

The organisation chart only works if it is anchored in governance requirements that sit above it.

• Board composition. At least half of the AMC's directors must be independent — persons not associated with the sponsor or its associates in any manner.
• Reporting to trustees. The AMC reports to the trustees on compliance, and the trustees in turn report periodically to SEBI. The compliance officer's independent line to the trustees is what makes that reporting meaningful rather than self-certified.
• Approval of key appointments. Trustees have a say in the appointment of key personnel and in the AMC's compliance arrangements, which is why the AMC cannot simply reorganise a control function out of existence.
• Restriction on other business. An AMC may undertake permitted activities such as portfolio management or advisory services only subject to SEBI's conditions, with adequate segregation of resources and no conflict with the interests of unitholders, and an AMC cannot act as trustee of any mutual fund.

Capital Behind the AMC

Governance is backed by capital. Under the SEBI (Mutual Funds) Regulations, 2026, sponsorship is available by two routes: a track-record route, resting on experience in financial services and a record of profitability, and a capital-strength route, which opens sponsorship to entities without a long fund-management history provided the capital and experienced-personnel conditions are met. On the track-record route the AMC is required to carry a net worth of INR 50 crore, which may step down to about INR 25 crore once the AMC has been profitable for five continuous years. The MF Lite framework for passive-only fund houses carries lighter capital requirements, on the reasoning that running an index fund involves materially less discretion than running an active one.

For a distributor the relevance is narrow but real: these are the requirements that stand behind the statement that a mutual fund is a regulated vehicle, and they are the honest answer to an investor who asks what stops an AMC from simply disappearing with the money.