As of March 2023, monthly SIP inflows had reached Rs 14,000 crores, doubling to Rs 28,000 crores within two years.
As the mutual fund industry grows, there needs to be synergy between the fund houses and the investment banking community, capital market regulator Sebi’s executive director Manoj Kumar said while speaking at the annual convention of AIBI on January 21.
“Unless a good quality paper comes into the market, it is very difficult for mutual funds to channel the money. So, from that perspective, there is a huge synergy between the two segments,” Kumar said.
Kumar said Sebi has been actively leveraging technology to ensure various compliances. Although initially, technology might seem like added cost, Kumar said there are many long-term benefits, especially in streamlining capital-raising processes.
He said the investment banking community too should embrace technology in a similar manner. “From the day you start taking a mandate from an issuer, initiate your due diligence process in terms of the regulatory requirement, and continuously update that information on the regulator’s portal or website.” This, Kumar said, would significantly reduce the time required for raising capital and minimize cost.
Sundeep Sikka, MD and CEO of Nippon Life India Mutual Fund said the mutual fund industry’s growth trajectory has been remarkable, with assets under management soaring from Rs 11 lakh crore a decade ago to nearly Rs 70 lakh crore in 2024. Kumar credited this growth to efforts in converting household savings into capital market investments.
Kumar said qualitative and timely fund raise in the market can open a new avenue for mutual fund segment. “Today, they are chasing very few listed companies. Going forward, we need a very huge canvas where large number of qualitative entrepreneurs raise capital from the market and get listed, giving mutual funds a huge avenue for investment,” he added.
“Today, mutual funds are driving the Indian capital markets,” Sikka said, underscoring the role played by systematic investment plans (SIPs) in this transformation.
The monthly SIP flow has doubled from Rs 14,000 crore in March 2023 to Rs 28,000 crore within two years. Still, this is only a fraction of the potential, said Sebi’s Executive Director, as less than 4 percent of India’s population invests in mutual funds. “The possibility of this Rs 28,000 crore going to Rs 50,000 crore or Rs 75,000 crore cannot be ruled out,” Kumar said, urging investment bankers to maintain high standards of public offerings. “We will always keep looking for high-quality papers from you.”
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