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Online brokerage platform Zerodha has received in-principle approval from the Securities Exchange Board of India (SEBI) to start its asset management company (AMC) or mutual fund business, founder Nithin Kamath announced.

In a post on the micro-blogging site Twitter, Nithin said, “So, we just got our in-principle approval for our AMC (MF) license. I guess now comes the hard part.”

In February, the co-founder of Zerodha had announced his intention of getting into the mutual fund business and felt that it would be necessary to get more people to invest in the capital market, especially millennials, through the mutual fund route.

According to the Association of Mutual Funds in India (AMFI), the assets under management (AUM) of the Indian mutual funds industry as of July 31, 2021, stood at Rs 35,31,853 crore.

The AUM of the Indian MF industry has grown from Rs 7.28 trillion as of July 31, 2011 to Rs 35.32 trillion as of July 31, 2021 which is more than a four-and-a-half time increase in a span of 10 years. The country at the present has close to 41 mutual funds.

The mutual fund has witnessed the entry of the new-age fintech startups that offer digital platforms to make it easier for investors to invest in this asset class.

The foray of Zerodha into the mutual fund business give the stock exchange discount broker an opportunity to expand its investment horizons and tap into the passive investor class.

This development comes on the back of its profitable stockbroking business, which makes it one of the few profit-making unicorns in the country.

The mutual fund has also attracted the interest of other founder entrepreneurs. Flipkart co-founder Sachin Bansal has forayed into the mutual fund business through his company Navi Technologies. He has launched various mutual fund schemes in passive funds.