Let us leave aside the contribution made by Paytm towards financial inclusion for some time. There is a lot to be cautious about the company. Just less than a year back, Paytm Wallet and Payment Bank had come for lot of flak from the RBI for slackening on compliance. In these kind of circumstances, picking up Paytm to act as the ambassador of retail financial inclusion and wealth creation appears to be quite incongruous. Would the money be really safe, more so considering that the stock has been one of the biggest value destroyers since its IPO in 2021. 

For now, SBI and Paytm have limited the choice of funds to just the SBI Balanced Advantage Fund. This fund has, on an average, delivered about 10-11% return in the last 5 years on CAGR basis. That is not bad, but let us understand that this is an allocation fund. For a Jan Nivesh customer with a saving of ₹250 a month, the primary need is to focus on wealth creation, which is possible through a diversified equity or multi-cap fund. That should be the focus, and the allocation hybrid funds can come in much later in the priority of things. Choice is limited. 

There is one small catch in the Jan Nivesh Scheme. If you go through the Paytm platform, you are forced to opt only for the Regular Plan. You do not have Direct option at all. What does that mean? The investment made by you in the fund will attract a much higher TER or the Total Expense Ratio. Typically, for equity funds and hybrid funds, the TER for a regular plan can be about 100 bps to 140 bps more than the Direct Plan. That is a lot of wealth creation foregone. In a chat with the press, the SBI chairman has said that there will be no commission charged on these Jan Nivesh Funds. It is not clear what that means. Does it mean that it will have no TER or does it mean that the TER will be the same as the Direct Plan? 

Today, it is possible to start a SIP with a much smaller amount. While funds may insist a larger SIP size for monthly SIP, they are open to smaller SIPs, if you are looking at it from a fortnightly or weekly perspective. That need not be a major constraint for you. More importantly, you can get the choice of the fund and the economy of a Direct plan, which will add a lot of value to you in the long run. There is the new Choti SIP launched across a much broader spectrum of MF products, and here is hoping that the product is better able to help in financial inclusion. Regarding the Paytm product, it could have surely been done better!