HDFC Asset Management Company (AMC) Chairman Deepak Parekh has said India's mutual fund industry remains significantly under-penetrated , with the country's penetration levels considerably lower than global averages.
"The MF industry in India remains significantly under-penetrated compared to global averages," Parekh said he addressed the HDFC AMC's 23rd Annual General Meeting (AGM).
Despite high growth, India's mutual fund AUM-to-GDP ratio is a low 16 percent against the global average of 74 percent, he said. Similarly, he said, equity AUM to market cap stood at 6 percent as against the global average of 33 percent.
Lauding the Securities and Exchange Baord of India (SEBI), Parekh said it framework played “a very important role in the growth of the industry”. The market regulator played the dual role of building investor confidence by regulating the industry, while creating a conducive environment for growth.
Talking about India’s economy, Parekh said growth in India accelerated in FY22 on the back of easing of restrictions, demand normalisation and supportive fiscal and monetary policy.
He, however, cautioned that rising inflation remained a concern, which had prompted the Reserve Bank of India to undertake an off-cycle rate hike of 40 bps in May and additional 50 bps in June.
The inflation pressure may not subside soon, increasing the possibility of further hikes into FY23, he said.
"Going forward, there are reasons to be optimistic on economic growth, on the back of prospects of normal monsoon, pick up in discretionary spend, robust exports, improved balance sheets of corporate and banking sector and signs of revival in private capex," Parekh said.
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