Incorporated in September 2018, India’s most effective online direct mutual fund investment platform Paytm Money has started migrating its user base to its broking business, after four years of operating as a direct mutual fund platform.
The company has been the choice of 3 million Direct Mutual investors and has facilitated more than 60 millions transactions so far. Currently, its platform services retail users in close to 99 percent of pincodes throughout India.
On 4th July, Paytm Money had sent an email to its users and asked them to comply with the additional Know Your Customer (KYC) norms as part of the platform’s shift to the services of BSE StAR, a mutual fund transaction platform. This shift entails users getting a unique client code (UCC) and a demat account.
“The last date to complete the mandatory KYC steps on the Paytm Money app is 25th July, 2022. If you are unable to comply with SEBI laws by July 25, 2022, future investments in direct mutual funds including SIPs, would be stopped as per our mandated guidelines”, mentioned Paytm Money.
The user integration with BSE StAR will have no impact on their existing Mutual Fund investments and they will be able to access the same on the company's new platform, once they complete the SEBI requirements.
In case users want to keep using Paytm Money for mutual funds transactions, they must first complete the mandatory KYC process and migrate to the broking site of the company. Paytm Money has assured its users that the process is completely free of cost.
However, users are under no compulsion to migrate to the broking business. Simply, they can keep making new investments, redemptions, and SIPs directly from the websites of the AMCs concerned. Before 25 July, the company has also allowed its users to place redemption requests on its platform and these requests will be processed in three trading days. Here it is important to note that this may trigger an exit load and have tax implications.
"Paytm Money since inception in September 2018 has been executing direct mutual fund transactions for lakhs of retail investors with our RIA code and using our own technology platform. We are migrating to the BSE StAR exchange platform and our transactions will use our broking code instead of RIA Code. To ensure continuity of investors‘ savings plan, all investors are required as per regulations to have a UCC code. Consequently, they are required to update their KYC and complete the application form for a demat account," said Varun Sridhar, CEO, Paytm Money.
“We have waived all charges and fees for this demat account as long as clients are investing only in mutual funds. Further, the MF units will continue to be in statement of account (SoA) form and not in demat form. Only if investors transact in equity will they be charged as per the current equity tariff, which anyway is very competitive. Fresh mutual fund investments will be in the direct plan," he added.
“Post the launch of the migration process, many clients have already completed their demat account opening and KYC to the BSE StAR MF platform. We are extremely grateful to these investors who appreciated our transparency and recognized our efforts in helping them gain 1% higher returns by investing in Direct Mutual Funds compared to Regular Mutual Funds. We continue our path to achieve financial inclusion and build India’s most loved wealth management platform," said Sridhar.
In order to remain compliant with regulatory regulations on Paytm Money and to be able to invest in mutual fund SIPs in the future, users are required to provide some additional information to what they have submitted while completing their initial KYC process with the company.
As per the email communication, this can be done simply by uploading a clear image of users signature on white paper and clicking a live photo via Paytm Money app. The entire process can be completed online and may not take more than a few minutes.