KOLKATA, Nov 30: The Indian Chamber of Commerce (ICC) convened its 16th Mutual Fund Summit on Saturday, under the theme Vikshit Bharat 2047 – Transitioning from Financial Inclusion to Financial Wellbeing, highlighting the need to adapt to rapid changes through expert perspectives.
Atanu Sen, Chairman of the ICC National Expert Committee BFSI and Former MD & CEO of SBI Life Insurance Company Ltd, Former Deputy MD of State Bank of India, commented, “India’s vision for 2047 emphasizes universal financial inclusion as a means to support economic growth and nation-building.
Despite innovations like UPI, which have improved access, only 47 million out of 750 million PAN holders are investing in mutual funds, resulting in a penetration rate of merely 3.2%. The growth potential in this sector remains substantial, driven by the rising levels of financial literacy and the adoption of fintech.”
Arun Laddha, Co-Chairman of the ICC National Expert Committee-BFSI, set the stage for the conference, noting, “The mutual fund sector in India is experiencing rapid expansion, with assets under management reaching ₹62.26 lakh crore by October 2024. This growth is propelled by advancements in AI and enhanced digital access, particularly in smaller cities, which is crucial for driving financial inclusion. Regulatory frameworks alongside educational initiatives are key to ensuring sustainable long-term growth in the industry.”
Discussing the opportunities and hurdles within India’s mutual fund landscape, Ananth Narayan Gopalakrishnan, Whole Time Member of the Securities and Exchange Board of India, stated, “The mutual fund ecosystem has undergone remarkable transformation, with the number of unique investors rising from 2 crores in 2019 to over 5.1 crores today, while Assets Under Management (AUM) surged from ₹23 lakh crores to ₹67 lakh crores.
This tremendous growth also brings an obligation to protect the ecosystem. However, mutual funds inevitably involve market risks. Financial inclusion in capital markets differs significantly from banking. Investors need to remain vigilant, acknowledging there are no guarantees, just opportunities accompanied by potential risks.”
“The essence of mutual funds lies in their promise of returns coupled with a need for understanding associated volatility. Notwithstanding recent market fluctuations, mutual funds have continued to yield solid returns, averaging close to 15% CAGR over five years, while indices have shown 10-12% returns in FY24, despite varying market conditions. Nonetheless, this stability should not lead to complacency. The sector must focus on enhancing risk awareness among investors, making it clear that market fluctuations are not anomalies, but fundamental to the investment process.
India’s mutual fund industry enjoys unparalleled access to data. Unlike many global markets where detailed data is limited, our exchanges and depositories allow for investment analysis at the individual level.”
“This advantage should be harnessed to improve risk management, steer investor decisions, and stress-test market conditions. Findings, such as that 93% of F&O traders incurring losses, illustrate the importance of informed engagement. As a collective unit, we must tackle deficiencies like delays in redemptions. With technology facilitating near-instantaneous transfers, transitioning to T+0 settlement should be prioritized. Streamlined processes will boost confidence in investors and enhance their overall experience.
While the mutual fund ecosystem’s growth is indisputable, this advancement necessitates vigilance. Instances of misconduct or oversights can jeopardize the very structure that supports this thriving sector. We, as guardians of this ecosystem, must adopt analytics, transparency, and collaboration to uphold its integrity.”
In discussing the progression of financial inclusion and literacy in India, Venkat Nageswar Chalasani, Chief Executive of the Association of Mutual Funds in India, remarked, “In spite of fluctuations in global markets, India’s economy remains stable and promising. All indicators, including analyses from global rating agencies and organizations like the World Bank, suggest that India is poised to be a major growth driver.
Nevertheless, our aspiration to become a developed nation by 2047 is not solely the vision of our Prime Minister but a collective duty for all of us. To achieve this goal, financial prosperity must pervade every nook and cranny of the nation.”
“This leads to the crucial matter of financial literacy. While India has an overall literacy rate of 75%, financial literacy is substantially lower at just 27%, as indicated by NCFB surveys. Overcoming this discrepancy is vital to ensure all citizens can seize the opportunities our economy presents. The Association of Mutual Funds in India (AMFI) has played a critical role in advancing financial literacy and inclusiveness.
Recognizing the need to connect with the community at all levels, AMFI has launched several initiatives. Through large-scale media campaigns, such as promotions during the IPL and extensive outreach efforts, AMFI is utilizing popular platforms to raise awareness about mutual funds.
Furthermore, grassroots involvement has been prioritized. Over the past year, AMFI and its affiliates conducted more than 13,000 investor education programs, reaching upwards of 16.5 lakh individuals.”
“In addition, targeting schools and colleges to instill financial literacy early is essential. Technology has emerged as a significant facilitator. With innovations like paperless onboarding via Aadhaar-based KYC, mutual fund investments have become increasingly accessible. The shift towards mobile applications and digital platforms is further enhancing reach, even in remote areas lacking physical branches.
While the mutual fund sector has seen tremendous growth, there is still much work to be done. Expanding distribution channels is critical, especially in underserved areas. AMFI intends to collaborate with local businesses and kirana stores to introduce financial products at the grassroots level. Upholding ethical practices is another fundamental priority. Enhanced training programs for distributors are being implemented to ensure suitable products are promoted based on investors’ risk profiles. Integrating financial education into academic curricula is also a significant focus moving forward.”
“Collaborations with institutions such as Delhi University and the Institute of Chartered Financial Analysts of India aim to embed financial literacy in formal education. Moreover, leveraging data insights is crucial. AMFI has begun releasing detailed reports that analyze investment trends by region, gender, and demographics. These insights guide targeted strategic interventions.
Lastly, innovation and transparency are vital. To maintain investor confidence, the industry must continue to advance while also enhancing disclosure practices. Regular stress testing and improved reporting systems are steps that support this objective.”
Sashi Krishnan, former CEO-NPS Trust and Director at the National Institute of Securities Market, touched on the intricacies of financial literacy, stating, “While 78 crore Indians have bank accounts and 52 crores are enrolled under Jan Dhan Yojana, of which half are women, 20% of these accounts remain dormant. Genuine financial inclusion requires not just access but also the knowledge and fluency to aid individuals—particularly in rural areas—in making informed financial decisions and sustainably managing their aspirations.”
In a special address titled ‘Shikshit Investor for Viksit Bharat’, K.S Rao, EVP and Head of Investor Education and Distribution Development at Aditya Birla Sun Life AMC LTD, remarked, “India has transitioned from a savings-centric economy to one focused on investments and wealth generation. However, challenges persist, especially in financial planning education, handling volatility, and attaining sustainable growth. To nurture financial independence, literacy must adapt to target various demographic groups while promoting disciplined strategies for long-term prosperity.”
In discussing considerations for standard savings, living adjustments, and associated risks, Joydeep K Roy, Partner at PwC, India Financial Services Advisory Leadership & Global Health Insurance Practice Leader, noted, “The financial futures of Indians hinge on a response to the demographic shift, with a youth population confronting higher healthcare costs and challenges linked to longevity. Retirement planning, often postponed, needs to commence sooner to safeguard financial independence. Potential solutions encompass real estate, reverse mortgages, health savings accounts, and proactive health management while fostering a cultural shift toward early retirement savings.”
On the topic of private equity, Abhishek Kabra, MD of Samara Capital, stated, “Private equity in India is gaining momentum and is evolving with considerable growth potential owing to market inefficiencies and the prospect for higher returns. Although global private equity AUM has reached $8.2 trillion, India’s contribution remains small, with venture capital and growth equity leading the market. This sector opens doors to high-growth industries and long-term investment prospects.”
In delivering the Vote of Thanks, a Former Member (Life) of IRDAI and Mentor of the Insurance-ICC National Expert Committee-BFSI concluded, “The mutual fund sector has undergone significant evolution, marked by notable growth in both innovation and accessibility. With the emergence of fintech solutions, mutual funds are now more accessible, providing seamless access via online platforms.
The industry is on the verge of greater penetration, especially in smaller cities. Advancements such as mobile applications have simplified investment tracking, highlighting the sector’s progress and future potential.” (UNI)
