Softbank-backed Paytm is planning to enter India’s Rs 22 trillion mutual funds industry with the launch of its digital platform by April-end
Softbank-backed Paytm is planning to enter India’s Rs 22 trillion mutual funds industry with the launch of a new digital platform by the end of April, reported Mint.
Paytm's upcoming Android and iOS applications will offer investors mutual funds from 12 of the 15 largest asset management companies (AMCs) in the first phase, with an aim to increase the number of investors to 25 by August.
The digital wallet's entry may add one more distributor in the list of asset management firms as Paytm claims to have a customer base of more than 300 million.
The firm plans to carry out distribution through Securities and Exchange Board of India (SEBI)-registered Paytm Money, another unit of One97 Communications Ltd, which also owns Paytm and Paytm Payments Bank.
None of the investors would be charged, Pravin Jadhav, chief executive of Paytm Money, said in an interview.
“Investments via Paytm Money will be free from any commissions or fees or any hidden charges until a certain threshold; beyond this investment limit, Paytm Money is considering options to include a very small transaction or subscription fee for its investment platform,” Jadhav said.
To avoid distributor commissions embedded on higher expense ratios, Paytm is planning to sell only direct plans with lower expense ratios. Paytm aims to provide a direct plan for investors without the help of a distributor directly from an investment adviser who is registered with the SEBI.
Considering that half of Paytm’s transactions occur in small towns, Paytm's entry may help in expansion of the mutual funds market beyond the top 15 towns, which has been on the rise. In 2017, only 28 per cent of individual investors’ assets in mutual funds come from “B15”, or “beyond the top 15”, towns, as of February, according to Association of Mutual Funds of India.
Industry experts seem to hold a similar view.
“As direct plans become more dominant and the role of technology goes up over time, Paytm will be able to take mutual funds to newer and newer people,” Sundeep Sikka, chief executive officer of Reliance Nippon Life Asset Management Ltd, told the paper.