
The ONDC mutual fund pipeline has arrived. Will it take over the industry?
A small set of fintechs and ONDC (Open Network for Digital Commerce) have come up with an audacious plan to revolutionise investing in mutual funds for India's masses. The initial pipeline has been built out and is operational. The full plan, still at the discussion stage among fintechs, mutual funds and ONDC, is breathtaking in its scope since it would involve a change to Sebi's (Securities and Exchange Board of India) regulations on the distribution of mutual funds. At the heart of this plan is the system created by a fintech company called Cybrilla.
Cybrilla, which has a license from Sebi as a Registrar and Transfer Agent, has built a system where the distributor and mutual fund can directly interface, bypassing legacy platforms. According to a fintech executive familiar with the matter, this brings down the cost per transaction from the current ₹2-7 range to just ₹0.75. The newer tech rails also give distributors more visibility on issues like transaction failures or delays. Eight mutual funds have entered the ONDC system, including the large players.
A new route of investing in MFs
'Think of us as a digital branch of the mutual funds. We will be time-stamping the transactions at the back-end, and with the help of our APIs, which are now plugged into the ONDC ecosystem, we will enable the last-mile distributor to connect with mutual funds directly. We will use Aadhar-based KYC for onboarding new investors. The system will bring down costs, which will enable mutual funds to facilitate low-ticket systematic investment plans (SIPs)," said Anchal Jajodia, co-founder of Cybrilla. APIs are application programming interfaces, and KYC is know your customer.Also read | What changed for India's mutual fund industry in FY25. Here are the top trends
API enables two separate software programmes to talk to each other. 'ONDC, like UPI, creates a standardised language for all participants; what is technically called a protocol. As a result, different apps and platforms can work together smoothly, like speaking the same language in a digital marketplace," explains Hrushikesh Mehta, senior vice president - financial services, ONDC.
ONDC was launched by the Department for Promotion of Industry and Internal Trade (DPIIT), which is under the commerce ministry, in 2022. The core idea behind launching ONDC was to decentralise the e-commerce segment, enabling local sellers—small business owners or small shop owners—to be discovered by buyers without the need to be on a platform.
The Association of Mutual Funds in India (Amfi) in its Vision Paper 2025 has already envisioned 'scaling models like ONDC for greater impact". High-traffic kiosks staffed by trained advisors could explain mutual fund products in regional languages while offering real-time onboarding with mobile technology. Kirana shop owners could be equipped with digital tools to onboard customers, explain products and facilitate small-ticket SIPs, replicating the success of India's Common Service Centres for government services," Amfi said in its vision document.
A new category of distributors
'The core proposition of ONDC is to make local kirana stores a point of acceptance for mutual fund investors," said Jajodia of Cybrilla.
However, this may require relaxing the regulatory requirements for distributing mutual funds or limiting the products that such distributors can offer or both. Also read | How online bond platforms work—and why premature exits are tricky
'Local kirana store owners can be given an algo-based system that does the basic risk-profiling of the investor as required by the regulations and suggests a suitable product to the investor," said the fintech executive.
'There can be a new category of distributors," a mutual fund executive said and shared a proposal that has been put forth before the regulatory body to create a light regulation for such distributors, which does away with requirements such as passing the NISM VA. The National Institute of Securities Markets conducts the NISM VA exam, which is a requirement for getting an MF distributor licence.'Instead, there could be a short, bite-sized course on explaining mutual funds to these first-time distributors," the mutual fund executive said.
Before a new set of ONDC-based distributors is created to widen the reach of mutual funds in small cities and towns, fintech platforms are taking the lead.
For example, Bachatt has launched a low-ticket daily SIP product, which allows investors to save and invest a minimum of ₹51 in mutual funds daily.Also read | You can now gift securities online. Here's how.
'We are currently offering only one fund—ICICI Ultra Short Term Fund. The cost-efficiency of ONDC helps to offer a low-ticket product. Later, we may even consider cross-selling credit and other products as investors would need different financial products at different life stages," said Anugrah Jain, co-founder and chief executive officer of Bachatt, which aims to give regulated savings products to small shopkeepers, food stall owners or mid-sized organised businessmen, through mutual funds.
'Over time, we plan to add more mutual fund products, but initially we want to offer simple debt products with the least risk," Jain added.
According to Jain, Bachatt currently has 15,000 investors with an average daily SIP of ₹105.
What mutual funds say
'The eventual goal is to even enable daily wage earners, small business owners, and local entrepreneurs to do low-cost mutual fund SIPs. Their cash flow cycles are very different from those of regular salaried-drawing investors in the cities. There is potential to widen the market size itself by taking mutual funds to the underserved," said Arpanarghya Saha, chief digital officer at Nippon India Mutual Fund.
According to data from Amfi, 82% of mutual fund assets are concentrated in the top 30 cities (data as of 30 April 2025) or T30 cities, as these are known in the industry. The remaining 18% is in smaller cities and towns.
'We need to look at the customer lifetime value. As long as assets grow and investors stay invested—buying the product for the right reasons and aligned with the right goals—these assets will naturally increase, since they are all market-linked products. Investment returns will, by default, increase the asset size. Over time, economies of scale will help sustain these products. However, the associated costs may not seem feasible in the initial stages," said Boniface Noronha, senior vice-president & head-digital business, Axis Mutual Fund. Also read | How stock market investors and traders can use liquid ETFs to manage cash
Some of the initial costs would include the folio creation charge, which is charged by the Registrar and Transfer Agent, and the KYC PAN check, which is charged by KYC registration agencies.
These mutual funds have already onboarded on ONDC—Axis Mutual Fund, UTI Mutual Fund, HDFC Mutual Fund, Quant Mutual Fund, ICICI Mutual Fund, Aditya Birla Sun Life Mutual Fund, Nippon India Mutual Fund and 360One Mutual Fund. According to industry sources, more mutual funds are planning to be onboarded on ONDC.
According to Ganesh Ram, managing director and chief executive officer of MF Utilities (MFU), established systems still have a significant role to play in deepening MF penetration. "MFU is a special vehicle created by mutual funds which absorbs the KYC cost and payment gateways charges, folio maintenance and non-financial transactions. Hence, focusing on transaction charge comparison may not be appropriate."
He added that the prevailing payment gateway charges have also come down, which is approximately ₹2 for UPI mandate registration and ₹0.5-0.75 per transaction (per quarter). 'In all payment modes, it's only net banking that's relatively expensive," he said.
An email query sent to BSE Star MF did not elicit any comment at the time of publishing.
Ironing out teething issues
Vishrant Suresh, founder of Asset Plus, a mutual fund platform for distributors, says ONDC's reliability should improve. 'We have been testing the ONDC pipeline with a few hundred transactions each month. Initially, the transaction rate failures were relatively high, as it was a new system. However, the framework is evolving, and we expect the reliability to reach industry norms very soon," he told Mint. Another mutual fund executive, who declined to be named, said that the initial momentum may be more due to a regulatory push than genuine interest from mutual funds. A number of fintechs have signed on, like Appreciate and Bachatt. It is likely that failure rates will go down as the system matures further and the cost savings are attractive to mutual funds. Legacy systems have their own issues.
A large number of transaction failures on election results day on 4 June 2024 was a wake-up call to players relying on legacy rails. Investors trying to 'buy the election results dip' that day ended up getting the next day's NAV (net asset value) after the market rose due to transaction processing delays. The system just couldn't handle the load.
However, the proposals advanced by the fintechs and AMCs associated with the ONDC rails go much further. Their next aim is payment gateways (aggregators), which take a cut out of each transaction ( ₹2-3 for SIP mandates).
There are two possible solutions. The first one is to partner with a bank that wants to break out into this space, according to the first fintech executive.
The second is more audacious. It envisages the use of RBI's Central Bank Digital Currency or CBDC. The CBDC is currently operational, and customers of large banks like HDFC Bank can download wallets and load them with e-rupee.
However, usage at the retail level is minimal since a CBDC can only be transferred to another CBDC wallet. However, if the system is adopted by mutual funds and investors create wallets—the collection of money becomes drastically cheaper.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Time of India
23 minutes ago
- Time of India
How to save tax on your Bitcoin investments in India, legally!
A way through the harsh tax reality of Bitcoin trading in India: Live Events Bitcoin ETFs: The Smart, Tax-Optimized, Regulated Choice Why do we look at Bitcoin as a risky alternative? Bitcoin ETF: The smarter choice for you! (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Indian investors have enjoyed massive gains in Bitcoin , up by over 123% in the past year and currently trading at near ₹1 crore, yet they're burdened by a harsh tax regime. A 30% flat tax, 1% TDS on each trade, and a blanket disallowance of loss set-off have made direct crypto investing punitive and this, there is always a way through the tedious tax regime: there is a smarter, tax-efficient and legal way to invest in current Indian tax rules, profits from Bitcoin trading are taxed at a flat 30% rate, plus a surcharge and a 4% cess. Every trade is subject to 1% TDS, irrespective of profit or loss. Worse still, losses can't be set off against any income, not even other crypto gains, and cannot be carried forward to future tax is one even supposed to make a profit under this regime? This makes us feel like it's less of a tax law and more like a daylight robbery. This means even a prudent, long-term investor is treated like a high-frequency gambler. No tax efficiency, no loss planning, and no differentiation between long-term holding and speculative legal and strategic alternative? Bitcoin ETFs. These are listed exchange-traded funds that track Bitcoin's price but are treated differently under Indian tax direct investments in Bitcoin, which are classified as Virtual Digital Assets (VDAs), Bitcoin ETFs, structured as units of foreign mutual funds, enjoy a favourable classification. If held for over 24 months, gains are taxed as long-term capital gains at just 12.5%, far more investor-friendly than the 30% on VDAs. If sold earlier, short-term gains are taxed at your regular income huge advantage: no 1% TDS. Bitcoin ETF transactions don't suffer from liquidity erosion like direct crypto trades do. Plus, losses from ETF investments can be set off against other capital gains and can also be carried forward to future years, something completely disallowed in direct Bitcoin investing under the current VDA regime as of now. For HNIs and serious investors, this structure can mean up to 60% in tax savings while keeping investments regulated and some platforms offer INR-settled Bitcoin futures, these instruments often operate in regulatory grey zones. They fall outside India's VDA definition but remain unregulated by SEBI, with no investor protection or the collapse of exchanges like Vauld and the ongoing restructuring of WazirX, both Indian exchanges now in Singapore courts, highlight the dangers of trusting unregulated platforms. WazirX's alleged claim that ₹5,000 crore of investor funds are actually company-owned while shielding itself under Singapore law shows how Indian investors are left with no local these platforms pose full counterparty risk. Unlike NSE/BSE derivatives offerings, which have clearing corporations and capital adequacy rules, crypto futures platforms rely entirely on internal solvency, thereby remaining unchecked, unaudited, and the supposed tax advantage is unreliable. Frequent crypto futures trading can attract business income classification, leading to the applicability of a significant compliance short, Bitcoin futures may offer a loophole, but they come at the cost of investor safety, regulatory compliance, and long-term viability. Bitcoin ETFs are unquestionably the better option for traders to invest in, while Bitcoin still carries remaining Indian investors looking to grow their wealth in a compliant, tax-efficient, and secure manner, Bitcoin ETFs offer the ideal solution. They combine the upside of digital assets with the structure and investor protections of traditional finance. Compared to direct crypto trading, Bitcoin ETFs allow investors to save up to 60% in taxes, avoid the 1% TDS, and claim loss set-off and carry-forward, benefits denied under the current VDA tax are platforms through which, Indian investors can now access US-listed Bitcoin ETFs via regulated brokers and GIFT City-compliant structures. In an environment of tightening regulations and ongoing failures of unregulated platforms, ETFs are not just a safer route; they're the only logical path forward.(The article is written by Srinivas L., CEO of 9Point Capital.): Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)


Business Standard
41 minutes ago
- Business Standard
Stock Alert: Mahindra & Mahindra, NIBE, Mahindra EPC, MCX, Hindustan Zinc
Securities in F&O Ban: Manappuram Finance, Hindustan Copper, Aditya Birla Fashion & Retail (ABFRL), Chambal Fertilisers & Chemicals shares banned from F&O trading on 9 Jun 2025. Stocks to Watch: Shares of HDFC Bank are likely to be in focus after officials from the Lilavati Kirtilal Mehta Medical Trust, which operates Lilavati Hospital in Bandra, Mumbai, held a press conference on Saturday, 7 June. The Trust called for the suspension and prosecution of HDFC Banks managing director and CEO, Sashidhar Jagdishan, over alleged involvement in financial fraud and corruption related to the Trust. In response, HDFC Bank issued an official statement denying all allegations. It further stated that Jagdishan is being targeted in an attempt to obstruct the recovery of a long-pending loan from defaulting borrowers. Mahindra & Mahindras production jumped 27.56% to 89,626 units in May 2025, compared with 70,261 units produced in May 2024. NIBE has entered into a licensing agreement with the Defence Research and Development Organisation (DRDO), Research & Development Establishment (Engineers), Pune. The agreement covers the transfer of technology (ToT) to manufacture modular bridging systems ranging from 14 to 46 meters in length. The contract is valued at Rs 3.76 crore. Kernex Microsystems (India) announced that its joint venture, the Kernex-KEC Consortium, has received a Letter of Acceptance (LoA) worth Rs 182.81 crore from Western Railway. Kernex holds a 70% stake in the consortium. Mahindra EPC Irrigation has received an order worth Rs 4.32 crore from the water resources department for allied works related to the implementation of a community micro irrigation project. The Multi Commodity Exchange of India (MCX) has received approval from the Securities and Exchange Board of India (SEBI) to launch electricity derivatives. Backed by both SEBI and Central Electricity Regulatory Commission (CERC), this move aims to help power generators, distributors, and large consumers hedge price risks and manage volatility. Hindustan Zincs board is scheduled to meet on 11 June 2025, to consider the first interim dividend on equity shares, if any, for the financial year 2025-26. The company has fixed the record date as Tuesday, 17 June 2025. Persistent Systems board approved the re-appointment of Anand Deshpande as the managing director (MD) for a next term of five consecutive years.


Time of India
an hour ago
- Time of India
Revenge code? Ex-employee in Bengaluru crashes grocery app after layoff
A dramatic cyber breach at Bengaluru-based grocery-tech startup KiranaPro has uncovered a bitter truth in the digital economy of the present day—startups can be as susceptible to insider attacks as they are to outsider cyberattacks. What had seemed to be a sophisticated hack proved to be an act of corporate sabotage by an erstwhile employee who had been fired but still had access to important systems. The breach happened in early June 2025, soon after KiranaPro started layoffs due to financial stress. As per the company's leadership, including CEO Deepak Ravindran, the former employee was able to erase parts of the company's backend infrastructure, such as GitHub code repositories, cloud logs, and some AWS-hosted services. Most importantly, it became possible due to the lapse in revoking access credentials once the employee had made a mistake that costed them dearly. Although the extent of the incident was serious, the company has assured that customer information was not breached. Due to internal backups, especially those located locally by other employees, KiranaPro managed to recover most of its system. Internal operations were disrupted briefly, though no core customer-facing services were directly impacted, though. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like เทรดทองCFDsกับโบรกเกอร์ที่เชื่อถือได้| เปิดบัญชีวันนี้ IC Markets สมัคร Undo The company subsequently lodged a police report and launched legal action against the perpetrator. Security vulnerabilities meets financial stress Although the act of sabotage itself was headline news, the circumstances behind it provide a clearer picture of the dangers many startups ignore. KiranaPro was reportedly struggling with the late payment of salaries to current and former staff at the time of the breach. Although the company hasn't attributed the delay to the sabotage, the timing has raised eyebrows about how financial woes can feed internal discontent. The attack also highlights a rising but underappreciated threat across the tech sector—internal users with admin-level privileges and unresolved grudges. Insiders have an advantage over external hackers in that they know the guts of a system, its vulnerabilities, and where to do the most harm. In this instance, no sophisticated malware or phishing was necessary; only a set of credentials and a motive were enough. The initial assumption by the startup that it had been hacked externally introduced a time lag between finding the real cause. Forensic tests were not done before the team arrived at the conclusion that there was no involvement of an outside entity. The breach was completely homegrown. credit: instagram What do we learn from this? KiranaPro's experience is a case study in the consequences that result when HR procedures and cybersecurity measures do not intersect. First, deactivation of credentials at offboarding has to become business-as-usual, particularly for firms dealing in sensitive infrastructure. Second, multi-level authentication and real-time activity tracking by administrative users have to become business as usual. Third, isolated and encrypted regular backups need to be treated as non-negotiable assets rather than optional layers. Finally, there is the human element. Startups need to understand that financial slowness, communication breakdown in layoffs, and insufficient emotional intelligence in employee transitions can all be building blocks of a poisonous culture, one in which digital revenge will indeed be an outcome. KiranaPro might have restored its data, but the actual warning is elsewhere: in an expanding environment where technicality takes precedence over procedural protection, even a single mistake can be the source of a breach not from the outside but from within.