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Nippon India MF uses technology, new initiatives to expand its investor base

Get higher returns on your salary through this!

In a bid to expand its assets under management (AUM) and entice the conservative salaried class Indians into investing in mutual funds, Nippon India Mutual Fund (Nippon India MF) has launched a technology-led product called ‘Salary Advantage.’

Through this product, a first-of-its-kind in the Indian market, an individual can choose to draw his/her salary not into a bank account but to a mutual fund folio opened by Nippon India MF where the individual can earn better interest rates than a bank account. In India, the average interest rate is about 3.5 per cent, the lowest in the world.

The Mumbai-headquartered MF company has tied up with around 100 companies for the ‘Salary Advantage Program’ wherein the former helps open ‘zero balance folios’ for the employees through which the salary is credited. The credited amount is then invested in liquid mutual funds that can earn returns as high as up to 6-7 per cent. The employees get a Visa-debit card, which they can use to withdraw money from any ATMs or use it at any retail point.

Talking to IBS Intelligence, Kapil Arora, Segment Head – New Business Initiatives, Nippon India MF said, “This (Salary Advantage) is a unique product and helps individuals to invest and save more with better returns. We have piloted this about three months ago and already have over a hundred companies opting for this program. Through this program, we expect to acquire one lakh, unique customers, within a year.”  At present, there are about 38,000 individuals who have opted for this alternate method of receiving a salary.  The company has also launched an app, through which individual investors can manage their payroll and investments.

Arora said the idea is to not only help the salaried class get better returns but also expand the mutual fund market in India, which underpenetrated at a mere 2 per cent,  and also improve the company’s AUM.

Arora added that as of November, monthly average inflow for the company, through this scheme, was pegged at over INR 200 million and AUM at INR 2.8 billion. The company is currently talking to several IT and consumer durable companies and online aggregators that employ temporary workers for partnerships to increase its investor base and AUM both.

“We have recently done a pilot with a food ordering app Swiggy and have got a good response. The market dynamics are changing with the gig economy catching up fast. We are trying to tap these potential individuals to drive the volume,” Arora said.

Explaining in detail on how the product works, Arora said that employees of the companies who have opted for Salary Advantage have the flexibility of choosing the quantum of salary that they want to receive through the MF folios. Depending on that, the pay is divided by the employer between MF account and savings account. He further added that the amount invested, through this product, is designed in a way that it is liquid and can be withdrawn at any given time.

Nippon India Mutual Fund was formerly known as Reliance Nippon Mutual Fund. The Anil Ambani-controlled Reliance Capital exited the mutual fund business by selling its entire stake in Reliance Nippon Life Asset Management Ltd.(RNAM) to its foreign partner Nippon Life Insurance in March this year.

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