Paytm Money — which will be offering direct plans, and not regular plans — has led to quite a bit of excitement within the 42-player MF industry. According to industry sources, several fund-houses have already empanelled themselves with Paytm Money.

To make sure investors get proper advice about various mutual fund schemes, Paytm Money has tied up with third-party mutual fund research firms such as Value Research and Morningstar. Direct plans come with lower expense ratios, but they bypass distributors that hand-hold retail clients, especially first-time investors.

There won’t be any distributor commissions for Paytm Money as it is a registered investment adviser (RIA) with the Securities and Exchange Board of India (Sebi). The app will charge a nominal fee for buying funds.

“Paytm’s entry bodes well for the mutual fund industry as it would help to deepen and widen distribution of mutual fund products,” said CEO of a large fund house.

The increase in the share of financial assets in household savings and the rising preference for investing through mutual funds have given an impetus to the domestic asset management industry. The assets under management (AUM) for the mutual fund industry has nearly doubled in the past two years, from Rs 12 trillion in FY16 to Rs 23 trillion at the end of FY18.