Securities and Exchange Board of India (Sebi), the Indian Government entity that regulates market, is on the verge of finalising guidelines for the sale of mutual funds on ecommerce platforms, reports Economic Times.
This would allow the likes of Flipkart, Snapdeal and other online marketplaces to sell financial products on their market, which have so far been the domain of brokers and banks. As per the source, the new guidelines could be rolled out in early January.
A few people familiar with the development have reportedly told, that SEBI chief U K Sinha met Nandan Nilekani, who is heading a committee set up to suggest steps to reduce cost structure of mutual funds, as well as representatives of ecommerce companies such as Flipkart, Scripbox, FundsIndia.com and Paisabazar.com in Bengaluru last month to discuss.
SEBI is likely to allow the sale of balanced and exchange-traded funds on the ecommerce platforms to start with as it wants to first gauge the customer response. If the experiment is a success, the ecommerce model could be employed for selling more financial products as well.
The commission to be charged by ecommerce firms is expected to be in the vicinity of 0.5 percent. When investors buy mutual funds directly from fund houses, there is no commission imposed. However, when they buy mutual fund through third-party distributors and financial advisers, a commission of around 1 percent is imposed. E-commerce firms might find their edge there.
The plan is to allow Aadhaar-linked digital KYC, which the central bank and SEBI have been considering for some time. Mis-selling provisions, which are used to prevent agents and distributors from misleading unsuspecting customers about the characteristics of products, too are unlikely to come in the way of fund sales through ecommerce platforms.
The guidelines are coming up at a time when ecommerce is making tremendous progress in India as people from small towns to metros are increasingly going online to purchase products across all categories. This report also comes amid a rather favourable legal environment for e-commerce brands, which includes a recent Delhi HC’s refusal to pass any interim order against e-commerce companies.
This is due to increasing Internet coverage and awareness, which will help fund houses to penetrate more markets in small cities and towns at lower costs.