Zerodha gets Sebi’s in-principle approval for starting AMC operations

“So, we just got our in-principle approval for our AMC (MF) license. I guess now comes the hard part,” Kamath said in a tweet on the microblogging website Twitter.

Sebi’s approval for Zerodha’s licence closely follows the approval given to

to start its asset management operations.

Zerodha had applied for a licence to start mutual fund operations in India in February 2020, just before the onset of the COVID-19 pandemic in the country.

“To grow the capital market participation from the current 1.5 crores and address those who currently don’t invest (Millenials), we think mutual fund as a product needs to be reimagined. So yeah, we have just applied for an AMC (Mutual fund) license,” Kamath had said in February 2020.

With Zerodha’s entry into the mutual fund space, India will now have close to 41 mutual funds. Indian mutual funds currently manage assets worth more than Rs. 35 lakh crore.

Zerodha known for its disrupting style that made it the country’s largest brokerage firm by user base within a decade of its launch is expected to bring the same disruption to the mutual fund industry that has been affected by the dominance of the top 10 players, high fees and underwhelming performance.

The top 10 AMC currently control close to 82 per cent of the industry’s managed assets and are considered to be ripe for disruption especially from low-cost index funds and exchange-traded funds.

On Tuesday, Flipkart co-founder Sachin Bansal’s Navi Mutual Fund filed scheme documents for 10 new funds with nearly all of them being index funds and some providing exposure to global asset management giants Vanguard. Zerodha is expected to go down the similar role in trying to ape Vanguard’s hugely successful model in India, which could provide low-cost investment solutions to Indians.