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Birla Mutual Fund launches India's first Payroll Savings Plan

Birla Mutual fund, India's largest private sector mutual fund with assets under management in excess of Rs 14 billion, launched a unique investment plan today in Bombay.

Payroll Savings Plan will transfer money directly from a salaried employee's pay cheque to a combination of investment schemes managed by BMF.

The plan is structured to help regular savings get invested into equities and debt without the usual paper work and procedural hassles.

"PSP has been launched in response to changing investor needs. We are confident of the plan doing well after seeing the response of the investors to our existing funds," said N K Sharma, BMF's Chief Business Development Officer.

PSP will open operations on May 14, 1999.

The plan works in the following way

The investor will use a customised software, essentially a financial planner, which will help him to understand his investment needs and allows him to arrive at an investment plan. He can them earmark an amount to be deducted from his pay cheque, which will be invested into the selected investment plans.

The minimum monthly investment is Rs 1,000. There is no upper ceiling.

The money thus transferred will go into a combination of various schemes managed by BMF. The investor can choose a combination of schemes. This depends on the amount of risk he is willing to take.

Aggressive Plan, the plan with the highest equity exposure, will have 70 per cent of the money going towards equity schemes and 30 per cent to income schemes. Optimal Plan will have the money split equally between equity and income schemes. Conservative Plan will have the money invested in the ratio of 70:30 in favour of debt schemes.

PSP is targeted at salaried employees, who do not have the time to take efficient investment decisions every month. PSP offers tailor-made solutions for each investor's specific savings requirements.

The investor will have to fill in a form stating the amount he wants to be deducted from his salary every month towards investment in PSP. The amount will be automatically cut from his salary every month and transferred by his accounts department directly to the funds decided upon in the investment plan.

The investor has the option of changing his investment plan at any point of time. The investor will also be updated on his investments under the plan through monthly statements.

PSP offers flexibility to investors. Apart from ensuring regular savings in quality investments, the investors are assured of easy liquidity. PSP addresses the problem of lower yields offered by savings bank account and the problem of liquidity posed by instruments such as provident funds.

To the investor, it is as easy as pocketing their pay-cheque after the PF deduction. And safe. BMF claimed that the money will be invested wisely by its fund managers who are well versed in risk management, who have access to information on industries, individual companies, micro and macro economic trends, government policies and all the other factors that can make or mar a particular investment.

PSP tries to make investing as conventional and as automatic as possible, said S K Mitra, director, BMF. It makes the investment process easy, efficient and allows the investor the expertise of a professional fund manager, he said.

BMF, Mitra recalled, has the distinction of managing some of the best funds in the country.

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