Indian mutual fund industry set to grow rapidly

Friday, 18 June 2004, 07:00 Hrs   |    1 Comments
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NEW DELHI: India's mutual fund industry is set to post impressive growth over the next few years on the back of rising incomes and higher savings in the country, said an industry study Thursday.

According to the Associated Chamber of Commerce and Industry of India (ASSOCHAM), the mutual fund industry is likely to enlarge its present share of six percent to the country's gross domestic product to 40 percent in 10 years.

The study said by 2014, the size of the industry is estimated to go up to over 1.65 trillion.

The industry has grown in size by about 200 percent from March 1993 to December 2003, at 1.40 trillion in terms of assets under management.

"The emerging trends indicate that the future investments will drastically pour into mutual fund industry that will automatically enlarge its share to the country's gross domestic product," said the study.

In India, mutual funds have been able to command investors' appetite only in recent years with the increasing presence of private sector companies and a distinct shift in investor preferences.

The industry body said the shift in investor preference towards mutual funds had been facilitated by fiscal incentives and increasing returns from debt mutual fund investments due to a decline in interest rates.

Availability of higher choices of investors, the gradual change in the risk profile of investors as well as attempts by industry to put in place an appropriate regulatory environment has helped the sector grow.

"The mutual fund institutions in India are one of the most important among the newer capital market institutions," said the study. "The industry has experienced the biggest structural change from monolithic structure to a competitive one."

Source: IANS
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