~ In the 50th year of the industry, Mutual Fund crosses
Rs. 10 lakh crore ~
CII-PWC report “Indian Mutual Fund Industry: Challenging
the Status
Quo – Setting the Growth Plan” released by Chairman
SEBI
~ Need to enter mind of customers by finding a way in
their hierarchy
of savings ~
~ CII annual summit emerges as important meeting point
for all
stakeholders in industry ~
“In the last decade
the Mutual Funds industry has seen tremendous growth and successfully faced
challenges. Yet, it has still not found mass acceptance because a grassroots
investor does not know the place of Mutual Funds in the hierarchy of his
savings. It is time for the industry to consciously brand itself as a different
asset management class altogether and as a long-term investment destination to
enter the mind of the people by finding a place in the hierarchy of savings,”
said Mr. U K Sinha at the 10th CII Mutual Fund Summit 2014, a flagship
Confederation of Indian Industry (CII) Summit now in its 10th year. The theme
for this year is, “Indian Mutual Fund Industry: Challenging the Status Quo-
Setting the Growth Path.”
Mr. Sinha also
informed that the year 2014 marks the 50th anniversary of the Indian Mutual
Fund industry because it was in 1964 that the industry began with the birth of
UTI. Today the industry has reached Rs. 10 lakh crore of assets under
management with around 4 crore accounts in the 50th year and that too at the
time of the 10th edition of CII Summit is cause for satisfaction, he said.
The time, according
to him, was also ripe for the mutual funds industry to introspect and find out
a way to improve its perception in the minds of the masses, to encourage them
to look at Mutual Funds right after their banking needs.
“The Mutual Fund
industry has to look at a long-term policy. There is clear-cut message to do
this: the industry has to position itself as one that mobilizes long term
family savings. Some of SEBI guidelines and recommendations are guided by
thinking on those lines,” Mr. Sinha said.
Mr. Sinha added that
SEBI has recommended to the government that the public sector undertakings
should park money in asset management companies, but not just in the public
sector ones. He expressed satisfaction that the policy pushed by SEBI for the
industry to go beyond the top 15 cities, have begun to show good results and
the money mobilized and people serviced in rural India has gone up. Yet, there
is a long way to go and much potential to be realized.
Comparing benchmark
indices Mr. Sinha said, “80% of assets under management have performed better
than the indices out of which more than 50% have outperformed by a margin of 5%
or more.” He also complemented and congratulated the industry on the way it
handled itself during the crisis last July when interest rates went up all of a
sudden. “The way the industry handled itself shows the robustness and maturity
of the industry. In any other market of the world, including some of the best,
such a situation would have been catastrophic,” he said.
Speaking about
debt-schemes where the availability of corpus was limited, Mr. Sinha said that
SEBI has raised the minimum threshold to 20 crores and has given the industry a
period of one year to comply with the same.
Mr. Sinha stressed
upon investor education in growing the market so it could reach its full
potential. He urged the industry to focus on the quality and the manner in
which the programs are conducted.
Uday S Kotak,
Chairman – CII Financial Sector Development Council and Executive Vice Chairman
and Managing Director, Kotak Mahindra Bank Ltd., echoing Mr. Sinha’s sentiment
said, “It is time for the industry to change its traditional mindset to that of
thought leadership, to rise above narrow perspective and to think of the sector
as a whole.”
Mr. Kotak also said
that the period between 2003-08 saw a strong emergence of issuer-investor model
of savings. However, since then it has gone back to the savers-borrowers model.
Also he said, Indians were investing more in physical assets than in financial
savings. “Besides a few external factors responsible for this, a lot of
internal practices of the industry have also been responsible,” he said, adding
that it is time for the industry to come together and relentlessly focus on
converting the saving of Indians into financial savings.
A CII-PWC report
titled, “Indian Mutual Fund Industry: Challenging the Status Quo – Setting the
Growth Plan” was released Mr. U K Sinha. The report states the asset management
industry is poised for significant expansion. As per the report, asset under
management (AuM) will rise to around $101.7 trillion by 2020 from a 2012 total
of $63.9 trillion. It also finds that assets under management in South America,
Asia, Africa and Middle East economies are set to grow faster than in the
developed world in the years leading up to 2020, creating new pools of assets
that can potentially be tapped by the Asset Management industry.
A Balasubramanian, Chairman
– CII Mutual Fund Summit 2014 and Chief Executive Officer, Birla Sun Life Asset
Management Co. Ltd., said, “There is a lot that the industry stakeholders can
do collaboratively to amplify the strength of distribution and move forward the
product into the market. It is important for the industry to now position
Mutual Funds as a long term investment vehicle.”
Sundeep Sikka,
Chairman – Association of Mutual Funds in India (AMFI) and President and Chief
Executive Officer, Reliance Capital Asset Management Ltd., said that the mutual
funds industry has the potential to reach 20 lakh crores in the next five
years.
He credited the
regulator stating that they nudged the industry in the right direction so that
today we are at a place where it can take a quantum leap. “Market need triggers
and the efforts of SEBI have been instrumental in the growth of the industry,
pushing it beyond the 15 key cities, improving investor education, pushing the
industry to play active role to represent minority share holders etc.”
R Mukundan, Immediate
Past Chairman, CII Western Region and Managing Director, Tata Chemicals Ltd.
reflected on the 10 year journey of this flagship CII summit. “It has been a
magnificent journey for the industry as a whole and with CII being part of the
journey in all its success and shortfalls. In the last 10 years, CII has seen
the industry mature and grow and it has provided a strong platform to the
industry stakeholders like the regulator, the fund houses and distributors to
come together and debate over current industry issues and address the
challenges.”
Mumbai