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How much ‘B30 cities’ contribute to total MF assets and why it’s important

SEBI had had classified cities as ‘T30’ and ‘B30’ — where T stands for ‘top’ and B stands for ‘beyond’

February 09, 2020 / 11:22 AM IST

Beyond 30, or the next 30 locations beyond the top 30 cities, contributed nearly 16 percent to the mutual fund industry’s total assets of Rs 27.26 lakh crore as of December 2019-end.

The balance was contributed by T30 cities, or to the top 30 geographical locations in India, according to data from the Association of Mutual Funds in India (AMFI).

In the last two years, the Securities and Exchange Board of India (SEBI), has been pushing mutual fund houses to reach out to the hinterland for garnering assets.

Towards this, the capital markets regulator had classified cities as ‘T30’ and ‘B30’ — where T stands for ‘top’ and B stands for ‘beyond’.

A month-on-month comparison shows that the AUM from B30 cities rose to Rs 4.2 lakh crore in December 2019 from what was Rs 4.2 lakh crore in the preceding month.

In terms of assets, 65 percent of the assets from B30 locations were in equity schemes in November and December 2019.

For T30 locations, equity oriented schemes accounted for 38 percent of assets in November and December 2019.

Why B30 cities are important

SEBI Chairman Ajay Tyagi at several industry events had directed mutual fund players to increase penetration in B30 cities.

In April 2018, to encourage large inflows from B30 cities, the regulator had allowed additional 30 basis expense ratio incentive to distributors.

MFs charge up to 2.5 percent on equity funds on an average. So, mutual funds or distributors who got inflows from B30 cities were allowed to charge an additional 30 basis points.

Financialisation of savings is more acutely needed in smaller cities. As per surveys, the top 10 cities have more financial assets in percentage, whereas families from smaller towns have more percentage in gold and real estate of their total savings.

With the most liquid assets being financial assets, there is a much larger scope to expand in small towns than what is covered by the MF industry so far.

Not just that, the SEBI chairman also wants to go into the B30 cities and expand the reach of the markets.

Himadri Buch
Himadri Buch
first published: Feb 9, 2020 11:22 am