The PAYTECH Book

Asset Management and Payments in India – So Near and Yet So Far

By Rajesh Krishnamoorthy

Vice Chairman, iFAST India Holdings Pte Ltd

As the asset management industry in India has found out, not all innovations in payments work. But there have been valuable lessons learnt for all participants, in India and elsewhere.

Let’s start by defining the payments ecosystem that powers the asset management industry in India. It has three main participants:

• National Payments Corporation of India (NPCI), a not-for-profit umbrella organization for operating retail payments and settlement systems in India. This is an initiative of the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act 2007 for creating a robust payment and settlement infrastructure in India.¹
• Any sponsor bank (mandated by the NPCI) that allows an asset management company/platform/broker dealer/payment gateway (referred to here as service providers) to access the NPCI services.
• The licensed scheduled commercial banks where millions of customers have their individual savings or current accounts.

The Business Pitch to a Billion People

Consumer investment is an important component of a modern economy. Mutual funds help to capture consumer investments and channel them into businesses, but the penetration of mutual funds in India (as calculated by the proportion of GDP that are “assets under management”, AUM) is significantly below the global average. ...