Dubai: Reliance Capital Asset Management (RCAM) expects the mutual fund industry in India to grow to 2,000 billion by 2020 on the back of regulatory changes and shift in investors' savings pattern.

Reliance Capital Asset Management (RCAM) has about 12 per cent market share in the mutual fund industry, which is pegged at 7.53 lakh crore at present, making it the second largest fund house in the country.

"We expect the mutual fund industry to grow to 20 lakh crore by 2020, mainly due to the change in regulatory environment as well as shift in investment patters," RCAM President and CEO Sundeep Sikka told PTI reporters.

At present, bank deposits account for 56 per cent of the total financial household savings and RCAM expects about 5-10 per cent of bank investors to shift to mutual funds during the period.

The shift from physical assets (like gold) to financial assets (like gold ETF and funds) would contribute about 60,000-90,000 crore to the mutual fund industry, Sikka added.

Due to the change in regulatory environment to manage pension and insurance assets, the AMC industry expects an increase of 2-7 per cent in the overall growth of the sector.

This could add additional 5 lakh crore - 7 lakh crore in the next 5-7 years for the industry.

Terming market regulator Sebi's recent guidelines for the sector as "most forward looking road map laid down by any regulator", Sikka aid it is now for the companies to push the growth in the industry.

Sebi Chairman U K Sinha had earlier said the industry has to go beyond top 15 cities for "good and sustained business".

Securities and Exchange Board of India (Sebi) had last month notified wide-ranging reforms for mutual fund sector in India, which would provide incentives to fund houses for expanding to small cities but might result in additional costs for investors.

According to industry estimates, the smaller cities (beyond 15 cities) contribute 28 per cent to the mutual fund sector and in the next seven years the number is expected to be 50 per cent.

Sebi had said mutual funds can charge additional expenses of up to 0.30 per cent of daily net assets, if the new inflows from places other than top-15 cities are 30 per cent of the gross new inflows in the scheme, or are 15 per cent of the average assets under management (year to date) of the scheme, whichever is higher.

Further, Sebi had said the expenses charged under these heads would have to be utilised for distribution expenses incurred for bringing inflows from such cities, and the amount incurred as expense on account of inflows from such cities would have to be credited back to the scheme in case the said inflows are redeemed within a period of one year.