According to a study by the Association of Mutual Funds in India (AMFI), the commission pool for distributors in FY2025 stood at around Rs 21,000 crore, marking a 40% year-on-year rise. Among large banks, HDFC Bank registered the lowest contribution from its captive asset management company (AMC), while SBI’s distribution business remained almost fully captive. Independent distributors such as NJ and Prudent have been among the biggest beneficiaries, with commissions growing at a compound annual rate of 30–35% over the past decade, according to a report by Kotak Institutional Equities.
Banks Lose Share as Independent Mutual Fund Distributors Gain Ground
The mutual fund distribution landscape has continued its gradual shift towards independent and open-architecture players rather than banks. The share of national distributors and smaller agents with assets under management below Rs 500 crore rose to nearly 75% in FY2025, compared with 63% in FY2019. Banks, especially private and foreign ones, have steadily lost market share. Elevated levels of new fund offerings (NFOs) supported distributors in generating strong commissions. Although commission rates remained similar to past years, the absolute money mobilized through NFOs was significantly higher at Rs 89,800 crore in FY2025, up from Rs 54,400 crore in FY2024. In FY2026 so far, about Rs 15,600 crore has been raised.
The report also noted selective commission cuts by large AMCs, highlighting that the revenue-sharing structure remains unbalanced, with top AMCs enjoying greater concentration benefits. However, distributors have the scope to consolidate and diversify across financial products. Kotak believes India will remain a commission-driven mutual fund market, even as direct equity participation rises. Future evolution could follow global trends: advisory-driven models (US), disclosure-based commission models (Europe), fee caps (China), or outright commission bans (UK, Netherlands). Regulatory initiatives like the revamped RIA framework and competition from passive-focused platforms are expected to further increase market penetration at lower costs.
Summary:
India’s mutual fund distributor commissions surged 40% to Rs 21,000 crore in FY2025, driven by record NFO inflows of Rs 89,800 crore. Independent distributors gained market share, while banks continued losing ground. Despite selective commission cuts by AMCs, India remains commission-driven, with regulatory reforms and passive platforms set to reshape distribution.