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Bajaj Capital, a retail-focused wealth management house, has forayed into the investment advisory business on a fee-only model. For this venture, a separate company — Bajaj Capital Investment Advisors — has been floated.
“We recently got the certificate of registration as an investment advisor from SEBI. A few pilots have already started. The registration has been done under SEBI’s investment advisor regulations issued in 2013,” Rajiv Bajaj, Vice-Chairman and Managing Director, Bajaj Capital, told BusinessLine here.
Talks are on with various mutual fund houses to give this new venture a set of low-cost funds wherein distribution costs are not embedded within the expense ratio, Bajaj said. The availability of lower-cost funds should help the new company justify the advisory fees charged on customers, he said Under SEBI’s investment advisor regulations, a company offering investment advice on investment portfolio containing investment products should have a minimum capital of ₹25 lakh.
Pricing concerns Meanwhile, to better manage the benign pricing conditions in the distribution industry, Bajaj Capital has redrawn its strategies for the next five years.
The company plans to deepen both its online and physical presence, including allowing customers to transact online through its electronic platform.
Bajaj Capital had roped in KPMG to help redraw its strategies and chart out a new course for this 50-year-old firm.
The recent ushering in of trail-based commission model will adversely affect the balance sheet of Bajaj Capital for the next two years although it may be good for the long term, Bajaj said.
The Indian distribution industry has undergone several pricing-led business model adjustments, right from the ban of mutual fund entry load in 2009 to rationalisation of insurance pricing in 2011. Now, there is the capping of upfront commissions and the move to trail-based model from April 1 this year.
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