Skip to main content

Sebi Wants E-tailers to Sell Funds Also

By
LOG ON Move likely to reduce cost of buying MFs and attract more investors who can save on fee to the intermediary
The Securities and Exchange Board of India (Sebi) is eyeing India's booming ecommerce segment to make mutual funds schemes available to a wider section of investors at a cheaper cost. The capital market regulator has sounded out e-commerce companies about the possibility of these firms selling financial products on their platforms.
Sebi chief UK Sinha met Nandan Nilekani -former chairman of Unique Identification Authority of India (UIDAI) -who heads the regulator-appointed committee to suggest measures to reduce cost structure of mutual funds, and representatives of e-commerce companies such as Flipkart, Scripbox, FundsIndia.com and Paisabazar.com, among others, in Bengaluru on Thursday in this regard.
“Sebi wants automation of mutual fund sales architecture including e-KYC (know your client) which will reduce the cost of buying mutual fund schemes. This will make it easier for investors to buy mutual fund products,“ said a person who attended the meeting last week.
A Sebi note on the topic sent to executives, who attended the meeting in Bengaluru last week, said, “The use of electronic means for buying and selling products in the securities market is not keeping pace with the developments in the e-commerce marketthe banking industry“.
Currently, investors can buy mutual funds directly or through distributors or financial advisors. Investing directly is cheaper than tapping the services of distributors because investors save on the fee they pay to the intermediary. This would result in the creation of the third category of net asset value (NAV) as the expense ratio -the amount that mutual funds charge investors to manage the money -of schemes sold through online platforms would be different from that of direct and distributor channels.
Through the `Online Only Distribution Model', the ex pense ratio of mutual fund schemes would be between the cost of money invested through the direct and distributor routes. Wealth managers said the proposed system will add to the complexity of investing in mutual funds.
“There is a need to reduce costs of investing in mutual funds but creating a third category of NAVs will only make it all the more confusing. Investors are just about coping with the direct plan,“ said Manoj Nagpal, chief executive, Outlook Asia Capital.
Sebi feels easing of the KYC or know your client process will be key to making investing through online platforms a success.
“One of the major bottlenecks identified was the present KYC process for onboarding of the investors through electronic online platform, for example, the need for oneon-one interaction for in-person verification, requirement of wet signature, etc,“ the Sebi note said. The capital market regulator said the e-KYC route with the use of Aadhar cards, validations using biometric phones and e-signatures will make investing through e-commerce platforms a success.
The Economic Times, New Delhi, 20th Oct. 2015

Comments

Post a Comment

Popular posts from this blog

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the...
Post a Comment
Read more

SFBs should be vigilant, proactive to mitigate risks: RBI deputy guv

By
  The Reserve Bank of India’s Deputy Governor Swaminathan J on Friday instructed the directors of small finance banks (SFBs) to be vigilant and proactive in identifying emerging risks in the sector.Speaking at a conference for directors on the boards of SFBs, Swaminathan highlighted the role of governance in guiding SFBs towards sustainable growth with stability. He also emphasised the importance of sustainable business models.Additionally, he highlighted the need for strengthening cybersecurity to protect the entities against digital threats and urged for a stronger focus on financial inclusion, customer service, and grievance redressal to ensure a broader reach of banking services.Executive Directors S C Murmu, Rohit Jain, and R L K Rao, along with other senior officials representing the Supervision, Regulation, and Enforcement Departments of the RBI, also participated in the conference.   -  Business Standard  30 th  September, 2024
Post a Comment
Read more

Brigade Hotel Ventures files draft papers with Sebi for Rs 900 crore IPO

By
  Brigade Hotel Ventures Ltd, owner and developer of hotels in South India, has filed draft papers with capital markets regulator Sebi to raise Rs 900 crore through an initial public offering (IPO).The proposed IPO is entirely a fresh issue of equity shares with no Offer-for-Sale (OFS) component, according to the draft red herring prospectus (DRHP).Proceeds from the issue to the tune of Rs 481 crore will go towards payment of debt, Rs 412 crore will be allocated to the company and Rs 69 crore to its material subsidiary, SRP Prosperita Hotel Ventures Ltd.Additionally, Rs 107.52 crore will be used to purchase an undivided share of land from the Promoter, BEL, and the remaining funds will support acquisitions, other strategic initiatives, and general corporate purposes.The company may raise up to Rs 180 crore through a Pre-IPO Placement.   If the placement is undertaken, the issue size will be reduced.Brigade Hotel Ventures Ltd is a wholly-owned subsidiary of Brigade Enterprises ...
Post a Comment
Read more