Stocks

‘Regulator should have a nuanced view on curbing practices’

NS Vageesh Mumbai | Updated on January 23, 2018

Srikanth Meenakshi, Founder, FundsIndia.com   -  Supplied Pic





 FundsIndia.com has been in operation for six years. Launched by two US-return software product builders turned entrepreneurs, CR Chandrasekar and Srikanth Meenakshi, the platform is well regarded in the investment space for its convenient user interface and unbiased advise. 

Srikanth says business has grown and at last count over 70,000 investors with AUM of ₹1,200 crore.



How did you begin this venture in 2009, a most difficult year for any financial services firm?

 Let me go back to that period. We didn’t know any better. Yes, we knew what was happening, but we didn’t consider it a hurdle. Besides, we were not teenyboppers. I was 40, and my co-founder was 43. We knew this would pass. We didn’t discuss this but we sort of intuitively knew. We saw this huge opportunity in front of us. In India, 2008-09, there was not a single investment platform. There were net banking and trading platforms, but nothing for investment. Even today, there are only a handful of investment platforms.

 It was such a terrible thing for the customer out there. We wanted to build a platform to cater to long-term investors. We had invested our own money in MFs and we knew the power of MFs — even with an entry load.   

Has the regulatory environment been tough on intermediaries?

 Yes. It has been challenging. Look at the MF regulations over the last five years. These changes have been revenue impacting.      

Aren’t they beneficial to the customer and fair — the credo that you swear by?

 There are ways you can be beneficial to the customer without being unfair to the intermediaries. Take the direct plan — which is about the ability of the customer to go directly to an MF and get his units — this is for investors who have the acumen and ability to go directly. But it is a sweeping regulation. It mandates every MF to offer every scheme with a direct plan option. It does not distinguish between different types of investors, different types of schemes. As things stand now, the change is detrimental to the distribution industry and in the long run, to investors also.  

Yes, some say there is a cost advantage in direct plans. But that was not the object of the regulator.     

I’ll say how it is harmful in a specific way. Mutual funds are not commodities. It is not like buying toor dal from Nilgiris or Spencer’s and you have the same thing. It is a finely differentiated product. When you dis-intermediate a non-commodity product, it seldom works out in favour of the customer and almost always works in favour of the manufacturer. For instance, if an MF house comes out with a new fund offer and carpet bombs the city with hoardings, who is there to say it is not a good product and that investors  should not be investing in NFOs?

 I do concede that some distributors may have indulged in ‘sharp practices’. But a regulator should take a nuanced view about curbing these practices, rather than how to get them out of the business.

Published on August 13, 2015

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