India is going smaller and smaller these days, with corporates eyeing glory by dreaming small. What Anil Ambani did with his Rs 50 systematic investment plan (SIP) idea, or even Ratan Tata and his idea of a Rs 1 lakh car, the Nano, Sahara MF's Subroto Roy is looking to beat with his concept of a Rs 10 SIP.
While this is still a proposal and the Reliance AMC is far and away the No. 1 in terms of AUM, and Tata Motors is another behemoth that dwarfs Sahara MF, yet the path to mobilise the masses into an unbeatable collective is still open for everyone to explore.
However, there is a huge concern hanging over Sahara MF as it is trying to trod the territory hitherto ignored by the MF industry. While Rs 10 is a very, very small amount by any standards, the fund is proposing various value additions and the foremost is to send its staff door-to-door to do the collections. Its advisors would collect the cash from investors and enter the payment in mobile devices that would be connected to the Sahara MF transaction server.
The fund is a plain-vanilla open-ended debt fund that would invest in debt and money market instruments. Though there isn’t anything special about the fund, but this idea of going to the masses with mobile-enabled devices has the potential of revolutionizing the whole industry, especially after the credit crisis in October 2008, which has made many old investors swear of investing in markets forever, and the new ones have been scared away by the horror stories. This unique method will bring a huge number of new investors, albeit small, into the markets.
Coincidentally this ‘new’ business model does take care of the Sahara India Financial Corp’s (SIFCL), a sister concern, own issue with Reserve Bank of India (RBI). RBI had directed SIFCL to slowly wind-up its deposit-related business, it’s a NBFC. This new model would provide existing advisors a viable alternative to funnel resources into. With a wide network of representatives, it would also be a welcome addition to the Sahara MF distribution system.
The only obstacle in this plan seems to be the Securities and Exchange Board of India (SEBI), which has mandated that MF investments can only be made through a valid Permanent Account Number (PAN) card. That is as far away from reality as you can get when you are approaching the masses – a daily wage earner or a shopkeeper, in the normal course, would not be having one.
But will SEBI change its rules just to please Sahara? At the outset, the likelihood of that happening is rare. But, Sahara MF bosses would be knowing that. Then why did they go forward.
If the fund-house can find a way to go around this obstacle then there is nothing that can stop Sahara MF from entering the exclusive club of top fund houses in India.
Whatever the ultimate fate of the Rs 10 SIP, it is amply clear that C.K. Prahlad’s advisory to corporates around the world is going from strength to strength -- look for profit at the ‘bottom of the pyramid’.