India’s mutual fund industry, once considered a ‘distant fortress reserved for the few, the bold or the privileged’, is now a ‘symbol’ of India’s financial democracy, Sebi chairperson Tuhin Kanta Pandey said while addressing the 30th Foundation Day event by AMFI on August 22, adding that they have become ‘bridges to opportunity’, empowering millions of small-town and first-time investors to participate in the growth story.
“An investor in a small town with a small SIP can cross that bridge and participate in India’s growth story,” he said. “This is financial democracy in action. This is investor empowerment.”
Sebi has taken a series of measures to enhance this access to investors, including initiatives such as Chotti SIP. “The sachetization of investing opens the door for first-time and small-ticket investors to enter the mutual fund space with confidence. This product is at a nascent stage today but can have a big potential to create a significant impact in the years to come.”
Other initiatives supported by the regulator include Mutual Fund Lite (MF Lite) to simplify access to passive investing vehicles like index funds and ETFs and Specialised Investment Funds (SIFs) to bridge the gap between mutual funds and PMS. other initiatives include Mitra and MF Central.
Tuhin Kanta also highlighted initiative for separate disclosures of expenses, half-yearly returns and yields, and risk-adjusted return information ratio.
While celebrating these, the chairman cautioned against complacency. “If growth is the body of this industry, trust is its soul and trust must be protected every single day,” he said.
Sebi chairman also stressed on the principle of fairness across all investor class, and said, “Any possible preferential treatment to any class of investors during subscriptions or redemptions should be avoided… strictly adhering to the cut-off time instills confidence.”
The growing need for enhanced cybersecurity too was flagged. “As more investors interact digitally, even a single breach can cause lasting damage to confidence. Protecting investor data is as important as protecting their money,” said the Sebi chairman.
Looking ahead, the regulator emphasized on the need to ensure mutual funds cultivate greater access across India. “Today, less than 5% of India’s population invest in mutual funds, which highlights the immense potential that lies ahead.”
To drive inclusivity, Sebi is working on incentives for distributors to bring first-time investors from B30 cities and additional incentives to encourage women investors. “Financial inclusion will remain incomplete unless women are equally represented,” Tuhin Kanta said.
Sebi has also scrapped over 50 routine reports and filings for AMCs as part of its effort towards compliance simplification. “Over the next few months, we will also be working towards a comprehensive simplification of mutual fund regulations,” he reiterated.
Technology, inclusivity and responsible innovation, Tuhin Kanta said, will define the mutual fund industry’s future. “Our true benchmark is not just AUM, it is trust and its management.”
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