Future of Mutual Funds in India
Sunday, January 21, 2007
By December 2004, Indian mutual fund industry reached Rs 1,50,537 crore. It is estimated that by 2010 March-end, the total assets of all scheduled commercial banks should be Rs 40,90,000 crore.
The annual composite rate of growth is expected 13.4% during the rest of the decade. In the last 5 years we have seen annual growth rate of 9%. According to the current growth rate, by year 2010, mutual fund assets will be double.
Let us discuss with the following table:
Source - RBI
Source - AMFI
Some facts for the growth of mutual funds in India
The annual composite rate of growth is expected 13.4% during the rest of the decade. In the last 5 years we have seen annual growth rate of 9%. According to the current growth rate, by year 2010, mutual fund assets will be double.
Let us discuss with the following table:
| Aggregate deposits of Scheduled Com Banks in India (Rs.Crore) | ||||||||
| Month/Year | Mar-98 | Mar-00 | Mar-01 | Mar-02 | Mar-03 | Mar-04 | Sep-04 | 4-Dec |
| Deposits | 605410 | 851593 | 989141 | 1131188 | 1280853 | - | 1567251 | 1622579 |
| Change in % over last yr | 15 | 14 | 13 | 12 | - | 18 | 3 | |
| Mutual Fund AUM’s Growth | ||||||||
| Month/Year | Mar-98 | Mar-00 | Mar-01 | Mar-02 | Mar-03 | Mar-04 | Sep-04 | 4-Dec |
| MF AUM's | 68984 | 93717 | 83131 | 94017 | 75306 | 137626 | 151141 | 149300 |
| Change in % over last yr | 26 | 13 | 12 | 25 | 45 | 9 | 1 | |
Some facts for the growth of mutual funds in India
- 100% growth in the last 6 years.
- Number of foreign AMC's are in the que to enter the Indian markets like Fidelity Investments, US based, with over US$1trillion assets under management worldwide.
- Our saving rate is over 23%, highest in the world. Only channelizing these savings in mutual funds sector is required.
- We have approximately 29 mutual funds which is much less than US having more than 800. There is a big scope for expansion.
- 'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are concentrating on the 'A' class cities. Soon they will find scope in the growing cities.
- Mutual fund can penetrate rurals like the Indian insurance industry with simple and limited products.
- SEBI allowing the MF's to launch commodity mutual funds.
- Emphasis on better corporate governance.
- Trying to curb the late trading practices.
- Introduction of Financial Planners who can provide need based advice.
Labels: MF, mutual funds
