SEBI approves Bajaj Finserv’s mutual fund operations

5 August 2022
4 mins read
SEBI approves Bajaj Finserv’s mutual fund operations

An Overview

Bajaj Finserv, a financial services company, stated on Tuesday that the Securities and Exchange Board of India (SEBI) has given the company its thumbs up to sponsor a mutual fund. In addition, the corporation will establish an Asset Management Company (AMC).

In line with the SEBI policies and other necessary rules, the firm would set up an Asset Management Company (AMC) and a Trustee Company, either directly or indirectly, i.e., itself or through its subsidiary, Bajaj Finserv said in an exchange filing.

In Tuesday’s stock trading, Bajaj Finserv stocks were trading almost 3% higher on the BSE, at Rs. 15,785 each share. The stock has increased by more than 75% year-to-date, and has increased by more than 140 percent in a year.

Further Key Takeaways

The firm was created in 2007 as a consequence of its demerger from Bajaj Auto Ltd. in order to expand the group’s financial services interests. The Bajaj Group’s financial services divisions are housed in Bajaj Finserv, which is a holding company.

The firm promises to offer all financial services and deliver smoothly through an app-based platform. By utilizing the online presence to provide low-cost, high-value solutions, the company intends to benefit from efficiencies and its customer network.

Bajaj Finserv’s total net profit fell by more than 31% to Rs 833 crore in the quarter ending June 2021. In the same quarter of the previous fiscal, the company made a net profit of Rs 1,215 crore. In Q1 FY22, the consolidated total income fell to Rs. 13,949 crore, down from Rs. 14,192 crore the previous quarter.

The SEBI permission for Bajaj Finserv’s mutual fund business arrives at a moment when Mutual Funds have expanded in reach among masses, with the industry’s assets under management (AUM) reaching an all-time high of 35 lakh crore at the end of July.

‘Stock has risen 69 percent in four months’- Updates:

After the company revealed that it has got a nod from SEBI for initiating a mutual fund, Bajaj Finserv shares hit a new intraday high of Rs 16,808, up 2% on the BSE in intra-day trade on Wednesday, after surging 10% in the previous two trading days. The stock was trading higher for the third day in a row, up 12% in that time.

In a stock exchange statement on Tuesday, Bajaj Finserv said it had acquired approval from the Securities and Exchange Board of India (Sebi) to establish a mutual fund. As a result, the corporation will establish an asset management company (AMC) and a trustee company, either directly or indirectly (via a subsidiary).

Bajaj Finserv is a financial conglomerate having interests in financing, life insurance, and general insurance businesses. Bajaj Finserv’s total business will benefit from the establishment of the AMC company. Many believe this gives a solid prospect for high growth because the firm already has a strong distribution network and client base through its loan and insurance companies.

Meanwhile, the stock has outperformed the market by gaining 69 percent in the last four months, compared to a 17 percent increase in the S&P BSE Sensex. The stock price has soared, pushing the company’s market capitalization above Rs 3 trillion. According to BSE data, Bajaj Finserv’s market capitalization was Rs 2.64 trillion at 09:30 a.m.


Frequently Asked Questions

Does SEBI regulate mutual funds?

In the case of mutual funds, SEBI develops policies, regulates, and monitors them in order to protect investors’ interests. In 1993, the Securities and Exchange Board of India (SEBI) published mutual fund regulations. The regulations were completely overhauled in 1996, and they have been updated on a regular basis since then.

What happens if a mutual fund declares bankruptcy?

Any existing investor should be aware that when a mutual fund company closes or is sold off, it is a critical topic to be aware of. Before the company is wound up, all investors are given a refund based on the most recent available net asset value.

Is it possible for a mutual fund to reach zero?

In theory, if all of the investments in a mutual fund’s portfolio went to zero, the fund would lose its entire value, but this is unlikely. Mutual funds, on the other hand, can lose value since they are meant to take certain risks or target specific markets.