By Elton Gomes
Paytm has now made its foray into mutual funds by launching its mutual funds application on Tuesday. The app will allow customers to buy and sell mutual funds and manage their portfolio from a mobile phone.
Paytm Money Ltd predicted that the number of mutual fund investors in India will increase more than double from the current 20 million to 50 million by 2023. It hopes that around half of these investors will utilize the mutual funds app.
Pravin Jadhav, whole-time director at Paytm Money, said that the company will acquire new customers at a pace faster than the Indian mutual funds industry and will quickly enter smaller towns. According to Live Mint, around 65% of customers who have registered on the app so far come from smaller towns.
How will the app work?
Paytm Money Ltd is a registered investment adviser with the capital market regulator, the Securities and Exchange Board of India (SEBI). Paytm Money acts just like any financial adviser that gives advice on purchasing mutual funds and charges a fee in return. It is likely that Paytm Money could be like any other online platform through which one can buy funds.
According to Jadhav, customers will be able to buy mutual funds directly from their bank accounts. Customers do not need to store money in their Paytm wallets. Paytm Money supports investing from more than 190 banks through auto-pay e-mandates, physical mandates, and net banking.
What services will the app offer?
Paytm Money will only sell direct plans of all mutual fund schemes. The expense ratio in direct plans is lower as they do not have distributor commissions embedded in them. Such plans are meant for people who wish to invest with the fund house directly or on their own through third party apps.
Additionally, Paytm Money will be offering systematic investment plans (SIPs) for as low as Rs 100 in some schemes. This will be done in an attempt to target individual investors in smaller cities.
Paytm Money has also tied up with leading rating services such as MorningStar, CRISIL, and Value Research, and users will get a free analysis of each funds performance in order to ease their decision-making process.
How can users register on the app?
Users will first have to open an account with Paytm Money, go through the Know-Your-Client (KYC) procedure, and then link their bank account. When users wish to purchase a mutual fund, money from their linked bank account will go straight to their mutual fund and they will receive units in return.
Paytm’s expansion plans
Paytm recently made headlines after Warren Buffett said he would be buying a small stake in the company. It was Buffetts first investment in an Indian company, and the deal is reportedly at a valuation of about $10 to 12 billion.
Prime Minister Narendra Modis demonetization helped Paytm to a considerable extent. Within 12 days of the note ban, Paytm saw over 7 million transactions worth Rs 120 crore a day. Since then, the company has continued its upward rise to fulfil Modis vision of a digital India.
In July 2018, Paytm partnered with SoftBank to launch a digital payments service, PayPay, in Japan. Thereafter, Paytm said that it had plans to launch services in Europe as well. However, plans were still at an early stage and might not kick off before next year. Early in July, Paytm expanded into the field of forex and offered services for money exchange of top 20 currencies. Paytm promised to not charge any additional commission, service charge, or hidden charges on the currency exchange.
Elton Gomes is a staff writer at Qrius