Introduction
As on 30 April 2022, the assets under management of the mutual
fund (MF) industry in India stands at INR 38.04 lakh crore, with
45% of the total assets being routed through direct plans. With
increasing focus on financial literacy, digitization, online
banking, smartphones, and awareness about MFs, investors can
leverage technology and directly invest in MFs, thereby
necessitating the need to regulate the domain, especially the
digital / technology platforms through which the execution of MF
investments is undertaken for a direct plan.
Background
Investment in MFs is made via two mechanisms: (a) a regular plan
which requires routing the investment through an intermediary (a
mutual fund distributor (MFD)); and (b) a direct plan in which the
investment does not involve any distributor / agent.
Understandably, investors prefer the direct plan having a lower
expense ratio, without any commission being paid to the distributor
/ agent, which is added to
