India's vision for 2047 hinges on improving financial literacy and expanding financial inclusion, according to a AMFI's Chief Executive Venkat Chalasani. Speaking at IFTA 2024, Chalasani noted that there is a need for transformation in the country's economic landscape, particularly in financial education and mutual fund growth.
"Our vision for 2047 is for India to become a developed nation. Financial literacy is crucial for this transformation," he said. Despite overall literacy levels of 77-78%, financial literacy in India remain low at just 23%. "Improving this allows people to make informed financial decisions," he added.
Citing data from the Reserve Bank of India, he noted that the distribution of household savings: 44% of savings currently go into real estate, 22% into gold, and only 34% into financial assets. "This distribution must shift if we aim for India to become a developed economy by 2047," he asserted.
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Mutual funds have emerged as a critical driver of financial growth in the country. "Since 2017, campaigns under SEBI's guidance have educated people about financial products," he explained. As a result, assets under management in the mutual fund industry have surged from Rs 10 lakh crore in 2014 to Rs 68 lakh crore today. Additionally, Systematic Investment Plans (SIPs) attract Rs 25,000 crore monthly, with over 5 crore unique investors.
But he believes there is significant room for growth. "The global average for assets under management relative to GDP is 65%, while India stands at just 27%. Developed countries exceed 100%," he noted.
To address this gap, the industry is leveraging technology-driven innovations such as paperless investments and streamlined KYC processes. However, much more remains to be done. "We're working with universities to integrate financial literacy into curriculums, ensuring people understand goal-setting and informed investment decisions," he said. Expanding the distributor network is also a priority. "Currently, there are 2.5 lakh distributors, but we need 10 lakh to make significant strides."
Talking about trust, Chalasani noted, "Comprehensive disclosures, stress tests, and risk assessments like the ‘risk-o-meter’ help build investor confidence," he said. Fintech firms play a pivotal role in this process by enabling better surveillance of investments and developing stress-testing models. "We’re in constant touch with fintechs to ensure transparency and mitigate risks," he added.
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