Management of Basiz Fund Services, speaks about their Fund administration Edge and the impact of digitalization – Deccan Herald

The potential for GIFT IFSC in inbound investment into India, Outbound for the world and also what we called Missed Call investments a.k.a jurisdiction purely for servicing the fund.In conversation with CA Aditya Sesh, MD, Dr. Sujata Sesh, Director and CA Shabarish, VP, Basiz Fund Serviceswho speaks about their leadership in fund administration and the role of digital currency in emerging market in India.

Basiz is the market leader in fund administration; tell us more about how the sector has changed since Basiz's inception.CA.AdityaSesh:At the time we started operations in India , the concept of outsourcing fund administration and fund accounting work was still to catch on. I vividly remember that in the initial days when I went around to talk about our services and what good we could do for them, the response would generally be that all this work could be done by them in house and this would be easy for them to administer. Some of them also had concerns about data security despite the fact that we had advanced security systems to ensure data security right from the start. It took many years of explaining to clients that the gamut fund administration, fund accounting, investor services and the allied requirements like support with taxation in various geographies etc are far too complex and diverse for an AIF and the Fund Manager to focus on. Our plank then and now is that the Fund Manager must be left free to focus on evaluating the investment, adding value to the investment and exiting it with the single minded focus on ensuring a decent return to the investors. It may be beneficial to outsource activities which do not fall under the purview of core investment activity.What are your expectations for your newest branch in GIFT City in terms of business operations?CA Shabarish:We were one of the earliest off the block to actually have a presence in GIFT City, Gujarat. We have been evangelising the benefits of GIFT City to all our clients in various parts of the world and we see a fair bit of interest in the minds of the people to understand the benefits of GIFT City. The potential for GIFT IFSC in inbound investment into India, Outbound for the world and also what we called Missed Call investments a.k.a jurisdiction purely for servicing the fund. One of the most important benefits that GIFT City offers to potential funds and investors is that it is a clean jurisdiction, does not carry any FATF baggage and has a very pro-active team managing it. Our personal experience in dealing with the officers there has been very positive. Having said this, it is only a question of time before the jurisdiction becomes popular with fund managers and lawyers around the world.How do you see your industry being impacted by digital money as it gains traction throughout the world?Dr. Sujata: It is important to define what we mean by digital money. There is an entire ecosystem which transacts using digital money. The great benefits of digital money are that it is seamless, quick, enables fast transfers, is traceable (from a security standpoint) when routed through an appropriate secure system, and should ideally reduce transaction costs over a period of time. The biggest threats are cybersecurity and the risk of counterfeiting. The Reserve Bank of India is exploring whether we should go in for a CBDC (Central Bank Digital Currency). This may not be very far away as blockchain technology has made great strides in the last few years. This may also help cross border transactions. In terms of the AIF Industry, it will be another mode of attracting investment and remittances which will be helpful. There are thoughts that the US, China and Japan are all in planning mode on rolling out a digital currency. It will achieve the desired traction once the guidelines are in place and people understand the security aspects. The recent directives by the Central Government to tax the capital gains on cryptocurrency shows that the Government is keeping an eagle eye on the usage of cryptos in India.

Where do you see digital currency going in the Indian market, and what policy steps do you anticipate the regulator taking?Dr. Sujata: Digital currency is in its nascent stage in India. It will get popular over a period of time and the Central Government is also aware of the positives and negatives of digital currency. In its simplest form, digital currency with reasonable level of controls will be useful to power the digital business push as also reduce transaction costs apart from reducing the need to store and transact with physical currency. As far as India is concerned, let us understand that when digital payments were introduced, we had many sceptics, including some who did not buy into this idea and were vocal about their opposition to this concept. I was reading a report recently which said that digital payments in India had grown by 33% in 2021-22 over 2020-21. In terms of volume of transactions, India effected 7422 crore digital payments in 2021-22 as compared to 5554 digital payments in the previous year. NPCI (UPI) alone recorded till February 2022 transactions of a value of Rs. 8.27 lakh crore. As businesses come back to normal post CoVid 19, it would be safe to expect that the only way digital will go is up. The regulator will continue and should continue to monitor this space carefully and will take all steps necessary to protect the interest of the user.How has the fund administration industry's operations changed as a result of digitalization?CA Shabarish: The AIF Industry has also needed to revamp its operations keeping in mind the increased level of digitalization going on. Hitherto, a substantial part of these activities consisted of physical transmission of documents, checking and uploading. We at Basiz have put all these items on to a digital onboarding process wherein a substantial part of these processes are completed through the online mode, including digital signatures. As we go ahead, I believe that digital will be the way forward as AIF Industry service providers try to strike an effective balance between the speed required by the industry with efficient checks and balances. Software development is driving this engine and as days go on, we will reach a level where with blockchain support, the entire ecosystem could be driven at one go.

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Management of Basiz Fund Services, speaks about their Fund administration Edge and the impact of digitalization - Deccan Herald