PFRDA has granted point of presence (PoP) online license to Paytm Money. This means, Paytm Money can now distribute NPS.
Pravin Jadhav, CEO, Paytm Money told Cafemutual that Paytm Money is the first company to receive such a license.
Paytm Money will mainly face competition from banks, as almost all the banks (both private and public sector) and majority of stock broking firm are POPs under NPS. However, banks can distribute NPS physically and online. PFRDA data shows that there are 263 active PoPs in India.
POPs are the first point of interaction of the NPS subscriber. These entities act as collection points and extend a number of customer services to NPS subscriber including requests for withdrawal from NPS.
Earlier, Paytm Money had announced that it has received SEBI approval for stock broking services.
By becoming PoP, Paytm Money can charge an upfront fee for initial subscriber registration. They can also charge a fee on subsequent transactions. Currently, a POP can charge Rs. 100 for initial subscriber registration and 0.25% on the subsequent transactions subject to a minimum of Rs. 20 and maximum of Rs. 25,000. Also, for incorporating any change in the subscribers account POP can charge up to Rs. 20.
However, Jadhav declined to comment on their revenue model.
Mutual fund distributors can also become retirement advisors to distribute NPS and charge a consultancy fee of 0.02% of AUM from NPS subscribers not exceeding Rs. 1000. In addition, they can charge an on-boarding fee of up to Rs.120 per subscriber registration. The company can also charge a fee on other services like Rs.20 for each transaction or Rs.100 annually. These charges have to be recovered directly from investors.
