By Prarthana Mitra
Mobile wallet service Paytm, owned by One97 Communications, will soon make a splash in India’s Rs 22-trillion mutual funds industry with a new app launched through Paytm Money. Slated for a late-April launch, the app will enable potential investors to choose products and plans from 12 major asset management companies (AMCs), gradually increasing the options to 25 companies by August.
Paytm currently has a user base of over 300 million and about half of Paytm’s transactions take place in smaller cities. The launch of the app could bring access to direct mutual fund plans to a new, unchartered and untapped market.
The digital wallet service has been quick to expand and diversify its services since the demonetisation of the Rs 1000 and old Rs 500 currency notes. Through the upcoming portal, Paytm aims to offer customers maximum returns on their investments by distributing direct mutual fund plans with zero commissions.
Mutual benefits for Paytm and AMCs
In a move that may shake up India’s mutual fund industry, Paytm Money will act as a digital platform that facilitates easy purchase and sale of direct plans without the distributor’s mediation.
This also eliminates the possibility of hidden or embedded distributor commissions, which serves to lower the expense ratio considerably. However, “Paytm Money is considering options to include a very small transaction or subscription fee for its investment platform,” said Pravin Jadhav, chief executive of Paytm Money.
Paytm is now authorised to offer investment advice
In an interview in January, founder Vijay Shekhar Sharma told media outlets the company is targeting to have 5 crore customers by May 2018. He also added he thinks a financial advisory business would be helpful in achieving this goal. On March 7, Paytm Money received approval of market regulator SEBI to become a registered investment advisor, paving the way for the payments bank to improve its fee income.
AMC’s currently have a market of about 18 million customers and with Paytm’s wide market base, they will now have access to a market 16 times this size. Earlier this year, Paytm also launched Paytm Life Insurance Corporation Limited and Paytm General Insurance Corporation Limited, marking its entrance into the insurance market in the country.
With its agenda to diversify, one thing is clear, Paytm is no longer simply a shopping mall for purchasing consumer goods.
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