Indian Mutual Fund Industry Clipping at 20-25%
CAGR till 2020 - New AMFI Chief NS Venkatesh
Veteran banker and bond market specialist NS Venkatesh,
who took over as the AMFI (Association of Mutual Funds in India ) chief late
last month, expects the industry to continue to grow at a compounded annual
rate of 20-25% over the next 3 years given the deepening financialisation of
the economy.
In his first interview after taking
over as the head of AMFI, Mr. Venkatesh told PTI that hes very optimistic about
growth prospectus of the MF industry as bank deposits to MF investments ratio
here is very low at about 20%, while the global average is around 1.5 times of
the former.
Mr. Venkatesh, who succeeded VR
Rajendran at AMFI who had stepped down in December 2016, had spent two decades
in IDBI Bank where his focus was treasury and international banking and the
last two years at Lakshmi Vilas Bank as an executive director where he led the
Chennai-based private lenders new-age transformation.
"Growing financialisation of the
economy, coupled with rising financial literacy levels, will ensure MFs will be
able to maintain present growth momentum and post a CAGR of 20-25% in the next
three years," Venkatesh said.
As of August, bank deposits stood at Rs
108.8 trillion, while mutual funds AUM stood at Rs 20.59 trillion, which is
only about 19%.
The over Rs 20-trillion MF industry
with 43 players has been witnessing rapid growth of late and AUMs touched Rs.
20.4 trillion in September, down 1% from Rs. 20.59 trillion in August, as per
AMFI data.
In FY17, AUMs soared 42% to Rs. 17.5
trillion over FY16, while in H1 of Fy18, it grew 33.82% to touch Rs 20.4
trillion.
For the September quarter, total MF
assets grew 7.6% to Rs 20.4 trillion. For the September quarter, net inflow was
in excess of Rs. 1 trillion.
"If the MFs industry continues to
grow at the present scale, which I am sure it will, over the next two decades
we can also catch up with our global peers in bank deposits to mutual fund
investment ratio," he added.
Known as the markets / treasury man,
Venkatesh was a member of the RBI technical advisory panel on money markets,
securities market & forex in 2011-16 when he also chaired the Fixed Income,
Money Markets & Derivatives Association wherein he helped it become a
self-regulatory organisation (SRO).
When asked about his vision/plans for
the MF industry, the 62-year-old said whatever he does will be to better serve
customers/investors.
Photo Business-standard.com |
Having played a key role in
transforming IDBI into a commercial bank, Mr. Venkatesh was the first CEO of
the IDBI Bank when it was a subsidiary of the infra lending parent till it was
merged with the banking arm. Two years ago, he was roped by LVB to transform
this traditional lender into a tech-savvy new-age lender by transforming the
people,systems, products.
He said he was successful in the last
two and the third part is underway at LVB which on completion will take LVB to
the next level.
At the AMFI, he wants to make it a SRO to
begin with, so that it can impart a better sense of purpose in the members and
bring in more transparency which will ultimately help investors and also bring
the cost down for them, he said.
Mr. Venkatesh also wants to take AMFIs
financial literacy drive to the next level so that more people invest in
financial products through the MF route.
Hell also focus on market development
to help the industry achieve better scale across the country and not just the
traditional Big 15 cities. He said the results of the literacy drive are
already visible with non-B-15 cities witnessing rapid growth. For instance,
there has been rapid growth in the Northeastern states with August showing a 66
per cent growth at Rs. 14,454 crore.
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