Page 20 - Banking Finance May 2023

MUTUAL FUND

diaries, thereby providing client level Reacting to the numbers, market ex- permit a new category of mutual fund
settlement visibility to CC and thus perts said that volatility is not such a schemes where asset managers'
avoiding the risk of co-mingling of cli- big hindrance for new customers as charges will partly be linked to perfor-
ents' funds and securities. they believe that it affects investors mance, according to an official docu-
who are in the market for a while, not ment reviewed by Reuters and a source
The Sebi board introduced an alterna-
the ones new to it. Sentiment will af- directly familiar with the matter.
tive route to enable a diverse set of
fect new customers more.
entities to become sponsors of mutual As part of the proposal, the Securities
fund (MF). and Exchange Board of India (SEBI)
MFs invest Rs. 1.82 trillion wants to allow additional charges if a
"Such entities, who otherwise may not
fund consistently outperforms a rel-
have been eligible to be sponsors, in- in equities in FY23
evant benchmark index and gives
clude private equity funds, with requi-
Mutual funds remained bullish on the
higher annualised returns, according to
site safeguards included in the pro-
Indian equities in 2022-23 and invested
an internal SEBI document.
posal," the market regulator said.
Rs 1.82 lakh crore largely due to a
The proposal to introduce perfor-
strong interest from retail investors
mance-linked charges on select mutual
25 million demat accounts and the correction in the market that
fund schemes has not been previously
led to reasonable valuation. This comes
added in FY23 reported. According to the plan, the
following a similar amount of Rs 1.81
Around 25 million dematerialised base fees currently charged for mutual
lakh crore invested by mutual funds in
(demat) accounts were added in the funds would be reduced and additional
the stock market in preceding finan-
2022-23 financial year (FY23), at a charges would be based on perfor-
cial year 2021-22 (FY22). Before that,
monthly average of over 2 million de- mance.
they had pulled out Rs 1.2 lakh crore
spite lacklustre returns and sustained
from equities in 2020-21, according to
volatility in the market. Mutual Funds' SIP collec-
the data with the Securities and Ex-
The number of demat accounts change Board of India (Sebi). tion rises 25 per cent to Rs
opened with two depositories - the
Going ahead, equity outlook for the 1.56 lakh crore in FY23
Central Depository Services (CDSL) and
current financial year (FY24) will start
Inflows in the mutual fund industry
the National Securities Depository
improving in a couple of quarters once
(NSDL) -- jumped 27 per cent in the through systematic investment plans
inflation starts coming down in the US
past 12 months, from 89.7 million to or SIPs reached Rs 1.56 lakh crore in
and its central bank -- US Federal Re-
114.46 million. 2022-23, up 25 per cent from the pre-
serve -- will change its policy stance
ceding fiscal, suggesting retail inves-
At the same time, the benchmark from hawkish to dovish, Rajiv Bajaj,
tors' trust in the route despite volatil-
Nifty50 declined 0.6 per cent in FY23, Chairman and Managing Director of
ity in the markets. In comparison, an
while the Nifty Midcap 100 rose a Bajaj Capital, said. In the longer-term,
inflow of Rs 1.24 lakh crore through
meagre 1.2 per cent and the Nifty India's growth prospect is higher
the route was registered in 2021-22
Smallcap 100 fell 13.8 per cent. amidst concern of slowing growth in
and Rs 96,080 crore in 2020-2021,
major developed economies.
Sustained rate hikes by global central data with the Association of Mutual
banks, the Russia-Ukraine war, stub- According to the Sebi data, mutual Funds in India (Amfi) showed.
born inflation, and the banking crisis in funds have invested a net amount of
Moreover, mutual fund SIP contribu-
the developed world raised volatility Rs 1.82 lakh crore in the just concluded
tion has seen over three-fold rise dur-
the year gone by. financial year.
ing the last seven years. It was at Rs
Even the number of initial public offer- 43,921 crore during 2016-2017.
ings (IPOs), seen as an investor lode- Indian regulator plans to
Additionally, SIP book has also grown
stone, declined in FY23. In FY22, consistently from Rs 12,328 crore in
allow mutual funds with
around 53 companies raised Rs 1.11 March 2022 to an all-time high of Rs
trillion through public offers while in performance-based fees
14,276 crore in March 2023, indicat-
FY23, 37 firms raised Rs 52,115 crore. India's market regulator is planning to ing a growth of 16 per cent.
BANKING FINANCE | MAY | 2023 | 19