The Securities and Exchange Board of India (SEBI), India’s regulator for markets, is expected to allow digital wallets to process mutual fund investments of up to Rs. 50,000. This would definitely make it easier for investors especially the younger ones to benefit from these investment opportunities. If SEBI does decide in favour of this move, the decision is expected to help promote simple as well as swift transactions. Further, it will reduce the number of transaction failures resulting from payment gateway issues.
Additionally, the availability of mutual funds through wallets would open up new opportunities for asset management companies (AMCs) by allowing them to team up with e-wallets to increase the penetration of mutual funds into relatively untapped market segments across India. In terms of benefits to investors, there is the chance of increased diversification of investment options available to them, which would also help the mutual funds business grow further. At present 41 registered AMCs in India are engaged in managing assets worth Rs. 18.3 lakh crores, which is expected to increase significantly if SEBI allows digital wallets to sell mutual funds through their platforms.
Though the details regarding SEBI’s decision have yet to be announced, the monthly cap on mutual fund transactions completed via this route is expected to be Rs. 50,000. SEBI may also require AMCs to agree to the use of select pre-paid payment routes in order to facilitate mutual fund investments through e-wallets. Additionally, mutual fund companies may also be required to ensure that e-wallets do not provide benefits such cash back offers on purchase of specific mutual funds. It is also fairly certain that mutual fund investments would not be allowed through wallet balance loaded through some payment formats such as credit cards, promo balance and cash back rewards.