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Financial services firms make a beeline to enter asset management business

Suresh P Iyengar Mumbai | Updated on August 05, 2021

FILE PHOTO: The logo of the Securities and Exchange Board of India (SEBI) is pictured on the premises of its headquarters in Mumbai, India, March 1, 2017. REUTERS/Shailesh Andrade/File Photo   -  REUTERS

Paytm, PhonePe are among firms eyeing the AMC business

The number of financial services companies entering the mutual fund business has gone up substantially after markets regulator SEBI relaxed the entry norms last December. This includes Trust Group, NJ AMC and Sachin Bansal-backed Navi Technologies with the latest one being Samco Securities.

Jimeet Modi, founder-director, Samco Asset Management said the mutual fund space is ripe for disruption with a massive opportunity to create huge value for investors and Samco is focussed on building a technology-driven investor-first and investor-centric company to deliver value to millions of Indian retail investors.

Umeshkumar Mehta, CEO of Samco Asset Management, said the fund house will launch its first new fund offer within the mandatory six months. “The team is already in place to create a distinct mark in this highly competitive industry,” he said.

Trust and Navi mutual funds have assets under management (AUM) of ₹858 crore and ₹728 crore respectively, as of June-end while NJ MF is yet to open its account. Payment and financial service providers Paytm and PhonePe are also looking to enter asset management business and launch their mutual funds products.

Currently, there are 44 mutual fund houses registered with SEBI and have AUMs of ₹33.66 lakh crore as of June-end.

Boost to start-ups

Last December, markets regulator SEBI paved the way for technology start-ups to enter the mutual fund business by waiving the profitability requirement to facilitate innovation and enhanced reach to more investors at a faster pace.

As a result, many technology-enabled financial solutions providers, which had previously not fulfilled the profitability criteria, became eligible to sponsor a mutual fund subject to having a net-worth of not less than ₹100 crore. Sponsors of mutual funds have to maintain net worth of the AMC until it starts making profit for five consecutive years.

Prior to amendment, the last mutual fund to be launched was the ITI Mutual Fund in 2019 which has accumulated an AUM of almost ₹1,560 crore. To ensure a safety net, SEBI has made it mandatory for all AMCs to maintain the minimum net worth on a continuous basis against the previous requirement of achieving it towards the year-end.

Despite the trouble in debt market, the AUM of mutual fund industry has increased 41 per cent last fiscal to ₹31.42 lakh crore.

Published on August 05, 2021

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