Mint BFSI Summit: Scaling with ₹2, a fintech’s sustainable dream

TLDR:

• The cap of ₹2 per transaction that fintech platforms can charge asset management companies (AMCs) under execution-only platforms 1 (EOP 1) is sufficient if done at scale, according to Radhika Gupta, managing director and chief executive of Edelweiss Mutual Fund.
• The Securities and Exchange Board of India (Sebi) recently released a circular outlining a roadmap for how fintechs that sell direct mutual funds can start making money on transactions, stating that EOP 1 licence holders could partner with AMCs and charge a commission from them, while EOP 2 licence holders could charge customers directly for providing a service.

The cap of ₹2 per transaction that fintech platforms can charge asset management companies (AMCs) under execution-only platforms 1 (EOP 1) is sufficient if done at scale, Radhika Gupta, managing director and chief executive of Edelweiss Mutual Fund said at The Mint BFSI Summit and Awards 2024. For context, the Securities and Exchange Board of India (Sebi) recently released a circular outlining a roadmap for how fintechs that sell direct mutual funds can start making money on transactions. It said EOP 1 licence holders could partner with AMCs and charge a commission from them, while EOP 2 licence holders could charge customers directly for providing a service. For the EOP 1 category, the Association of Mutual Funds in India (AMFI) has proposed a cap of ₹2 per transaction. “The per-transaction costs of AMCs are quite expensive,” said Gupta, clarifying that AMCs also need to keep costs in mind while doling out commissions to fintech platforms. “We lose money on a ₹100 SIP [installment],” added Gupta.