Starting a year ago, Paytm Money has made inroads into the mutual fund industry. Now, the company plans to offer more investment products over the next few months, which include NPS and stock broking said Pravin Jadhav, Whole time director, Paytm Money in an interview to Aparajita Gupta.
Paytm Money is a 100 per cent subsidiary of One97 Communications (Paytm) and we expect an investment of up to Rs 250 crore over the next 18-24 months. We received Rs 40 crore from Paytm in line with this in September, which the company will invest towards products, technology and expanding the team and setting up new business verticals.
Our focus with these investments is quite straightforward -- we are invested in making investing simpler and accessible for millions of Indians. We have done it for mutual funds so far, and aim to expand beyond this.
We have received approval from PFRDA as Online POP that enables us to offer NPS (National Pension System) to our platform. We plan to digitise the experience end-to-end and are evaluating the best way to do the same -- expect to launch this in the current financial year.
Besides this, we are continually in the pursuit of bringing the simplicity of investing to our consumers. We have received the regulatory approvals from SEBI for offering Stock Broking and Depository Participant (DP), as well as membership approvals from both the stock exchanges -- BSE and NSE.
Paytm Money was launched for investors last year -- September 2018, it was a natural extension for Paytm to now expand from Payments (with Paytm), to banking (with Paytm Payments Bank) into more financial services like Investments (with Paytm Money).
The first investment product that we offered our users is mutual funds and we have seen over 3 million users in less than a year. We are presently India’s largest online platform for mutual fund investments with all 40 AMCs directly partnering with us. We have taken an investor-first approach in all our offerings, which has led us to offer only direct investment plans of mutual funds, with lower expense ratios which result in up to 1 per cent higher returns when compared to regular mutual funds that were traditionally sold via banks and distributors.
We have been very clear on our objective from the day we started -- to bring wealth creation opportunities to millions of Indians. We started with mutual funds and in this effort we are heavily invested in not only digitising the complete experience but also simplifying the complete journey from onboarding to payments to investment management.
For example, we were the first large platform in India that decided to offer direct mutual funds to our users. From Day 1 we offered the option to users to invest from over 200+ banks, and for the first time enabled investing via UPI. We continue to be the only platform that offers all mutual fund schemes from all 40 AMCs, we are the first large platform to offer NFOs, over four Instant Redemption schemes, ratings from all leading players, and many such innovations.
Since we cater to a lot of new-to-industry users, to guide them in their investment journey our advisory team has launched Investment Packs - which is a recommended investment portfolio that has a combination of multiple schemes, which are recommended to the user on the basis of their risk profile assessment.
We aim to launch Switch to Paytm Money soon, which will allow users to switch from regular mutual funds to direct plans on Paytm Money. We also expect to launch a fully functional website for investments.
To be honest it has been great and we are extremely thankful to our users. In the past year, we were able to acquire over 3 million users without spending a single rupee on customer acquisition and we intend to keep it that way. In fact, there has been a shift in the mindset of investors in the sense that we are seeing significant interest in MFs as opposed to other traditional modes of investments.
Over 65 per cent of our users are first-time investors, who have never ever invested in any capital market or investment product before. We see over 80 per cent of our users coming from tier III and IV towns and villages, thereby aiding towards financial inclusion in India. We have been focused on small-ticket investments and over 85 per cent of our transactions are Rs 500 and below.
We also continue to focus on long-term and SIP-based investing; presently, over 75 per cent of our users are SIP investors and now we are the single largest contributor of new SIPs to the industry for months together -- overall contributing to 40 per cent of all SIPs registered in the direct mode.
While investment in the regular plan exceeds those in the direct ones by a huge margin, the increasing inflows in direct plans are proof of the shifting mindset in the investing faction.
We will offer more investment products over the next few months, which include NPS and stock broking, with more to come later. What’s more important for us is to build products that are simpler for common users (first-time investors) to understand and invest.
Investing in mutual funds is essentially based on your financial goals, risk profile and investment horizon. Once you gain clarity on these three aspects, you would be able to make an informed decision. Investing via SIPs is a smart and efficient way to stay focused and committed to your investment horizon.
As an investor, you may want to follow a long-term approach and invest in direct plans of mutual funds to boost your overall returns on investment. This allows you to maintain emotional composure even during extreme market volatility. Limit the frequency with which you tend to check your portfolio. An emergency fund can be created to support any immediate need for cash. This helps to curb anxiety and prevents you from making unplanned adjustments in your portfolio.