Jio Payments Bank Receives License to Distribute Mutual Funds from AMFI
A subsidiary of a leading financial services company, Jio Payments Bank has secured the much-needed license from the Association of Mutual Funds (AMFI) in India to distribute mutual funds. AMFI termed this development as gaining a Category 1 Execution-only Platform (EOP) status, which will enable the bank to distribute the direct plans of various mutual fund schemes. This is a significant milestone in the expansion of the bank within the financial services sector.
As a Category 1 EOP, Jio Payments Bank will earn transaction charges from fund houses. The transaction fee is set at a maximum of Rs.2 per transaction, establishing a clear revenue stream for distributing mutual funds.
Currently, AMFI has registered 15 Category 1 EOPs. The distribution sector for direct plan mutual funds would be led primarily by stock brokers who have already made their mark in the digital investment space.
In early August, the parent of Jio Payments Bank further upped its stake from 78.95% to 82.17% following another investment of Rs.68 crore. This reinforces that confidence in the growth prospects of the payments bank exists.
The parent company has further deepened its stake in the financial services market as it seals a strategic joint venture with a U.S.-based investment management firm. This joint venture on wealth management, broking, and the distribution of diversified financial products will consolidate with its broader strategy to grow its footprint in the financial services industry.
Investment choice will widen with further competition, particularly in the direct plan segment, with the entry of Jio Payments Bank into mutual fund distribution, part of a larger vision by the parent organization for the asset and wealth management business.
Recently, the joint venture received in-principle approval from SEBI for entry into the mutual fund business. Final approval would be provided by SEBI following due fulfilment of all regulatory conditions, which may take about one year.
These recent steps highlight the commitment to becoming a big force in the Indian financial market. Through the technology-driven approach and strategic partnership through which it intends to attract an extensive range of clients who seek investment and asset management solutions, the company steps forward.
