Future of Mutual Funds in India

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:

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

Source - RBI

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

Source - AMFI

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.