Future of Mutual Funds in India

Mutual fund got an profitable and exemptionally bright future if to be go through the data of the past and future expectations .  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 to reach 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.

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.