Indian MF industry needs strong distribution networks: PWC

By siliconindia   |   Thursday, 23 June 2011, 19:29 IST
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Indian MF industry needs strong distribution networks: PWC
Bangalore: Indian mutual fund industry needs a strong distribution network in order to expand their horizon, says a report by PricewaterhouseCoopers (PwC) and the Confederation of Indian Industry (CII). The report "Towards 2015: Sustaining Inclusive Growth - Evolving Business Models", highlights India as an alluring investment site with its roots embedded into high savings and investment rate. Along with the need for distribution networks the other key challenges the industry faces is, low penetration levels, the industry needs to move towards inclusive growth and also assessment of regulatory and business trends in other global economies. After the global crisis of 2008, it is observed that the mutual funds industry is going through a transformation. Highlighting the existing phase of the Indian mutual fund sector, it is noticed that the participation from the retail sector is low and the industry faces several other challenges. Listing few challenges are the limited reach to the smaller towns and cities, cost factor and lack of investor education. These are crucial factors that the funds house is catering to. According to Jairaj Purandare, Executive Director & Leader, Financial Services, PWC "The mutual fund sector has shown remarkable progress over the last decade and harbours immense potential for extensive growth in the future. Our interaction with market participants has reaffirmed the critical role that distribution has to play in this industry, and it is essential to focus efforts towards strengthening the distribution network." The report also focuses on the dilemma the distribution community faced after the restrictions on the entry load and looks for feasible measures to deal with this change. The report lists the various changes that took place in the previous year along with its impact on business. The chairman of CII Mutual Fund Summit 2010 and Chairman & Managing Director, UTI Asset Management Company, U K Sinha said "Market participants are waiting to see how the industry adapts to these changes, while trying to maintain its pace of growth. Mutual funds are restructuring their business models to provide for increased efficiencies and investor satisfaction." He also said that "India has vast growth potential backed by a resilient economy, commensurate with an accelerated GDP growth rate of 7.4 percent, high rate of household savings and investments."