Zerodha gets SEBI's in-principle nod to set up mutual fund business

India's largest broking firm Zerodha has received in-principle approval from market regulator SEBI (Securities and Exchange Board of India) to create a mutual fund asset management company (AMC). Zerodha had applied for an AMC licence in February 2020.

Nithin Kamath, Founder and CEO of Zerodha, confirmed this via a tweet on Wednesday: “So, we just got our in-principle approval for our AMC (MF) license. I guess now comes the hard part.”

Kamath in this February 2020 tweet had said that to grow the capital market participation from the current 1.5 crores and address those who currently don't invest (millenials), mutual fund as a product needs to be reimagined.

With the SEBI approval, the discount brokerage joins companies like Samco Securities and Bajaj Finserv, which recently received the SEBI nod to set up mutual fund businesses.

On August 24, Bajaj Finserv had also received the regulatory go-ahead to set up its mutual fund arm. It said it will be setting up an Asset Management Company and the Trustee Company, directly or indirectly, as per the SEBI rules. The company had applied for a mutual fund licence on September 28, 2020. Before that, Samco Securities also got the SEBI approval for launching its mutual fund business.

Also read: Bajaj Finserv gets in-principle nod to set up mutual funds arm

Some more entities that have also applied to SEBI for a mutual fund licence are Helios Capital Management, Alchemy Capital Management, Frontline Capital Services, Unifi Capital and Wizemarkets Analytics.

The overall buoyancy in the stock markets has attracted many new investors and mutual funds have also been one of the beneficiaries. According to the Association of Mutual Funds in India (AMFI), the umbrella body of all mutual funds in the country, the total assets under management (AUM) of the fund industry was pegged at Rs 35.35 lakh crore as on July 31.

The AUM of the mutual fund Industry has grown from Rs 7.28 lakh crore as on July 31, 2011 to Rs 35.32 lakh crore as on July 31, 2021. In May 2021, the industry also saw the total number of folios go past the 10 crore mark.

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