The Securities and Exchange Board of India (SEBI) has given Bajaj Finserv in-principle approval to set up a mutual fund (MF), the company said on August 24. Accordingly, the business would establish an Asset Management Company and a Trustee Company, either directly or indirectly, i.e., itself or via a subsidiary, in compliance with applicable SEBI Regulations and other applicable regulations, according to Bajaj Finserv’s exchange report.
As a result, the firm would establish an Asset Management Company and a Trustee Company, either directly or indirectly, i.e., through a subsidiary, in line with applicable SEBI Regulations and other applicable regulations,” according to Bajaj Finserv’s letter. Bajaj Finserv Limited is a subsidiary of Bajaj Holdings & Investments Limited, a loan, asset management, wealth management, and insurance company.
Read also: Bajaj Finserv Gets SEBI Approval: Stocks Skyrockets
An online discount broker, Samco Securities, obtained clearance from the capital markets regulator Sebi to begin its mutual fund operations earlier this month. All of this comes after the Securities and Exchange Board of India (SEBI) enabled Fintechs to seek mutual fund (MF) licenses in December. Bajaj Finserv’s entry would likely increase competition in the market, which currently has 42 mutual funds. While the top five fund companies control a substantial portion of the industry (57.85 percent of investor assets), a newcomer like Bajaj Finserv may gradually establish a strong footing due to its vast distribution reach.
Bajaj Finance, the company’s sister firm, operates in 2,392 sites, with 1,357 in rural regions, small towns, and villages. This extensive branch network can assist the MF firm in expanding outside the top-30 cities, referred to as B-30 places in the industry. The low penetration of mutual funds in India is one of the key factors driving financial institutions to enter the market. According to recent research, the MF industry’s assets under management account for just 12% of India’s GDP, while the worldwide average is 63 percent. Other emerging countries with a significantly greater percentage of mutual fund investors include Brazil (68 percent of GDP) and South Africa (48 percent of GDP).
Read also: Bajaj Finserv EMI Store announces cashback offer up to Rs. 750 on premium mattresses