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Ananth Narayan G, Whole Time Member, SEBI said that mutual fund distributors have played a pivotal role in creating financial awareness and improving financial inclusion. He was speaking at the Mutual Fund Summit organised by Moneycontrol recently.
The whole-time member said that MFDs should follow asset allocation and ensure that they work in the best interests of investors.
Narayan G said that distributors by definition gets commission on the products they sell. However, this fact should not determine their recommendation. Also, the MF industry should continue to put in place adequate checks and balances to maintain code of conduct and ensure that MFDs sell products based on suitability of their clients.
The SEBI member has also urged the industry participants to engage in constructive discussion with SEBI and tell the regulator if they notice any egregious practices in the industry. He said it is collective responsibility of the industry participants to develop the trust in the MF industry.
Narayan G also spoke about the need to educate investors about risk. He said that the risk factors should be communicated in a language that people can understand.
Here are some interesting statistics that the WTM has shared:
- 51 crore people have linked their Aadhaar and PAN. Currently, the MF industry has just 4 crore investors as on Sept 2023 which indicates that the industry has a long way to go
- Individual AUM increased from Rs.12 lakh crore in March 2020 to Rs.26 lakh crore in September 2023
- Of the total individual AUM of Rs.26 lakh crore, the AUM of retail investors or investors having investment of less than Rs.2 lakh is Rs.12 lakh crore. In March 2020, this number was Rs.4 lakh crore
- Banking industry has Rs.25 lakh crore in savings account and Rs.32 lakh crore of currency notes is in circulation
- The MF industry has AUM of Rs.48 lakh crore as against Rs.200 lakh crore of banking industry
