Overview of Fund Services in India Rakesh Mehta

Overview of Fund Services in India Rakesh Mehta Assistant Vice President

Key trends in the domestic market § The Indian mutual fund market has witnessed varying trends in fund inflow during the last decade § The aftermath of the global credit crisis had led to continuous outflows for the next five-six years. § The situation reversed in the last fiscal with net positive inflow, which while lower than the 2008 levels is a welcome sign for the industry, especially the growth in equity schemes. 2

Growth in global AUM of world-wide mutual funds and exchange-traded funds [ETF] stood at $33. 4 trillion at year-end 2014, with more than 80% of the assets held across USA and Europe. Mature markets of USA and Europe have demonstrated lower CAGR for the 5 -year period starting from the beginning of this decade. Higher growth in India represents the latent potential of the Indian market which can be tapped to improve the penetration of the mutual fund industry in India. 3

Key Issues for lack of investment in mutual fund market § Inefficient distribution channel - Concentration of AUM in a select number of cities has led to disproportional concentration of mutual funds distributors in these cities, leading to higher competition and lower return on investments made, in developing distribution channels § Access - A large population of country invests in Fixed Deposits, Chit Funds, etc. in terms of financial services § Lack of Awareness - Unawareness amongst majority of potential individual investors is a major cause of lack of participation in the Mutual Fund market 4

Key areas for penetration § Indian mutual fund industry is emerging as the preferred investment choice for retail investors in India. § Encouraging and mobilizing savings of small investors. § The confluence of emerging technology and enabling regulation will facilitate the industry to broaden and deepen its reach amongst retail investors. § Evaluation of e-commerce/digital platforms to sell mutual funds § E-KYC and its subsequent adoption will aid the penetration of investment in mutual funds 5

Available Platforms to Investors § MF Utilities by Association of Mutual Funds India § Mutual Fund Services System (MFSS) by National stock exchange § St. AR MF platform by Bombay Stock Exchange § Platform provided by two Registrars for Mutual Funds § Online platforms provided by Mutual Funds § Holding mutual funds with CSD § National Pension System by PFRDA 6

Manner of holding mutual funds Investments in mutual funds can be held by investor § With CSDs along with the other securities § With RTAs SEBI Initiatives § MFs / AMCs mandated to provide an option to the investor to hold units in their demat account with CSD § Know Your Client (KYC): where investor is desirous of holding MF units in dematerialised form, the KYC performed by the Participant associated with CSD would be considered compliance. § CSDs entrusted with the responsibility to issue Consolidated Account Statement (CAS) to all the investors having demat accounts. 7

NSDL initiatives pertaining to Mutual Fund Investments Modules for processing Conversion and Redemption requests: • Conversion of Statement of Account into demat form. • Redemption of MF units (held in demat form ) through Participants Free Transferability of MF units • Investors can transfer the MF units from one demat account to another for units held by them in their demat account CAS • NSDL CAS features the Consolidated view of Financial Assets, Insight of portfolio across various asset classes. It gives Enriched experience of managing portfolio effectively and Rich analysis of portfolio for better decision making and simplified monitoring 8

NSDL CAS highlights Across Depository Participants Across CSDs Across MF AMC’s Holdings and Transactions 9

Mutual Fund investment in demat Advantages of holding Mutual fund in demat § Easy to buy and sell § It is safe to hold units in demat mode as risk of losing units are zero § A high degree of convenience through online transaction § All the holdings are available in one account which help to locate all the investment at one place § Higher efficiency as holdings are consolidated in single demat account. 10

THANK YOU 11