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In good news for the MF industry, the MF industry AUM now is equal to 29% of the total bank deposits in india.
According to the analysis of numbers released by RBI and AMFI, while MF AUM stood at Rs.65.74 lakh crore in March 2025, Indians kept Rs.227 lakh crore in their bank deposits.
Another report released by Franklin Templeton Mutual Fund reveals that the ratio of MF AUM to bank deposits has grown by 3 times in the last 10 years ending on March 2025.
In FY24, the MF industry was equal to 26% of the total bank deposits. Also, over the last five years, this proportion has consistently remained above 25%.
Nilesh Shah, MD and CEO, Kotak Mutual Fund believes that mutual funds should not be subtracted from bank deposits. Shah said, “It is money from one pocket to another pocket. In fact, by accelerating multiplier effect if at all MF supports deposit creation. The MF AUM growth is due to mark to market appreciation as well as net flows which doesn’t subtract from the deposits. Globally there are very few markets like US where MF AUM has grown above bank deposits due to facility like cheque writing. While we do expect mark to market to grow, we don’t foresee it exceeding bank deposits for some time to come.”
Suresh Soni, CEO, Baroda BNP Paribas Mutual Fund said that this proportion has been steadily rising over the last two decades from 9% in 2004 to 29% now. Soni said, “This is primarily on the back of wealth creation by the MF industry and rising awareness among investors. As the savings rise, people look for investment avenues beyond traditional deposits and MF has found favour with investors. Also, popularity of SIP and support of our MFDs, media and regulators have helped in growth of the industry. We expect this trend to continue as more and more people become aware about the benefits of investing in MF.”
A CEO requesting anonymity said that the growth in MF AUM to bank deposit is largely due to inflows in equity funds and mark-to-market gains. He said the MF industry AUM in fixed income funds has actually gone down from 10% of bank deposits in 2016 to 8% of bank deposits now.
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