NCDEX, the largest commodity derivatives exchange, has ventured into mutual fund distribution with the launch of NCDEX Nidhi on Wednesday.
The exchange target to take MF investments to smaller cities through its farmers producers organisation (FPO) network.
NCDEX banks on its over 700 FPOs and its exclusive 200 broker organisations to reach villages.
NCDEX has already got 20 people from small villages to clear the NISM exam conducted to qualify as MF distributor.
Rural focus
The transaction platform focuses on expanding mutual fund penetration in rural and semi-urban India, before marking its entry into the equity trading.
The platform has onboarded six fund houses including Nippon India Mutual Fund, HDFC Mutual Fund, Axis Mutual Fund, LIC Mutual Fund, Tata Mutual Fund and Invesco Mutual Fund. Around 20 more asset management companies (AMCs) are expected to join by the end of August.
Arun Raste, Managing Director and CEO, NCDEX, said Nidhi is a natural extension of what NCDEX has always stood for, which is connecting India’s underserved communities to formal, regulated markets.
With this launch, the exchange will reach MF to rural and semi-urban India by using its network built over two decades, he said.
The venture will now become a gateway for millions of first-time investors beyond the top 30 cities to participate in the mutual fund story, he said.
Both the regulator and fund houses are supportive of the initiative as it opens up doors for farmers and smaller cities to participate in the India growth story, said Raste.
The platform has embedded UPI transactions to facilitate faster adoption.
Rajiv Relhan, Managing Director & CEO, NCDEX Clearing Corporation, said the MF transaction platform marks a natural next step for NCCL, widening its role into a new asset class and reinforcing position as a settlement backbone for India’s evolving markets.
Tojo Banerjee, Chief of Equity Business, NCDEX, said the mutual fund penetration in rural and semi-urban geographies remains well below its potential, not due lack of demand but for lack of accessible distribution.
NCDEX Nidhi directly addresses that gap by putting a simple, compliant and API-ready platform in the hands of distributors, Registered Investment Advisers, Asset Management Companies and retail investors, he said.
Cybrilla is the technology partner behind setting up NCDEX Nidhi. The firm is a Category-I RTA registered with SEBI and was appointed for its expertise in setting up the mutual fund platform.