The Indian security market watchdog, the Securities and Exchange Board of India (SEBI), in a discussion paper, favoured sachet format retail dispensing of mutual fund’s systematic investments.
In the past, expanding the client base for asset management companies (AMCs) was not operationally viable due to narrow profit margins. However, advancements in technology have now made it possible for these companies to manage an unlimited number of investors from any location, effectively addressing the issue of operational viability. No extra technology expenses are involved in managing more accounts, regardless of their size. While AMCs have fixed technology costs, these advancements allow them to attract more customers, including potential future high-value investors.
This plan can encourage people, particularly middle-class households in rural and urban areas, to develop a habit of investing in safe securities that are non-traditional yet futuristic. An investor can begin with Rs 250 a month. If investors have the flexibility to invest varying amounts each month or week based on their available surplus, Asset Management Companies (AMCs) can increase their asset volume. This approach offers investors a valuable alternative and provides a pathway into the broader investment landscape.
