National Commodity and Derivatives Exchange Limited (NCDEX) launched NCDEX Nidhi, a new mutual fund transaction platform aimed to bridge India’s rural and semi-urban investment gap. The platform is built on an API-first architecture which will allow distributors to transact either directly through the NCDEX Nidhi portal or by integrating the platform’s APIs into their own systems.
The key capabilities of the new platform includes accurate timestamping to ensure transparency and reduce issues related to applicable NAV, universal SIP autopay to activate SIP mandates across all major UPI applications, clear failure reasons for easier query resolution during onboarding, flexible transaction support including lumpsum transactions in new or existing folios across schemes of fund houses, flexible SIP options aimed at investors with irregular income and end-to-end support for all investment transactions.
Leveraging FPO Networks
Arun Raste, MD and CEO, NCDEX shared while talking to Financial Express that the new platform aims to increase the reach of mutual fund industry in smaller locations by collaborating with the top fund houses of the country and NCDEX’s existing network of about 800 farmer producer organizations (FPOs), each with an average size of about 250 members. He expressed hope that the combination of brand value of top AMCs and familiarity of rural investors with NCDEX will increase trust in mutual fund products among villages and small-towns. He added that the exchange is helping FPOs in attaining the pre-requisite certification to become mutual fund distributors and aims to expand this network as new FPOs join the exchange.
Raste explained that FPOs can gain mutual fund license of two types: one to distribute mutual funds within their organization as well as another to sell mutual funds to the general public. The exchange will help members to gain both kinds of licenses based on their convenience. He believes that the new distribution channel will also help the transaction platform to differentiate itself from its rivals. “We aim to open a new market for fund houses which will benefit FPOs with additional income and aid people in the smaller locations who are still investing in traditional avenues like gold and fixed deposit to enter the capital markets. The increased inflows in mutual funds will further aid to make Indian markets self-reliant.”
AMC Partnerships
Raste shared that NCDEX has already collaborated with five top AMCs and will partner with more 15 fund houses in the next 1-2 months. The exchange plans to collaborate with corporative organizations in the future to further expand the distribution network.
Besides the new platform, the exchange also shared plans to launch more weather-related derivative products on rain and heat, derivative contracts on platinum and freight alongside plans to enter the security markets in Sri Lanka and Bangladesh through partnership with the respective security markets.