Rural market in India is one key area that could help in the growth of the MF industry
During the seventh edition of the national CII Mutual Fund Summit 2011, Subir Gokarn, Deputy Governor, RBI said, that in the changing business environment, appropriate schemes need to be devised to attract rural investors for the growth of the MF industry.
Mutual funds have now become one of the primary areas for the nation’s financial growth. However, the true potential of the sector is yet to be unleashed as the challenges which the industry is facing is hindering its growth.
“The role of mutual funds to promote savings continues to be insignificant with size of mutual funds industry being less than 10 per cent of the Indian GDP,” said Gokarn. “One major reason is that MF penetration in rural areas is small and there is a perception that they are only meant for middle and high income groups. For the MF sector to grow rapidly, we have to devise appropriate schemes to attract rural investors and find ways for the financial inclusion of low income households,” Gokarn said.
Chitra Ramakrishnan, Joint MD, NSE agreed. According to her, “80 per cent of the business for the MF industry is generated in the metros. Thus, the rural market remains mostly untapped, which allows ample scope for growth.”
