CII, PWC report on Indian Mutual Fund industry shows the way ahead

Mumbai, July 12 (UNI) The roadmap required to achieve Vision 2015 has been detailed in the Confederation of Indian Industry (CII) and PriceWaterHouseCoopers (PWC) report on the ''Indian Mutual Fund Industry: Sustaining Growth in a Maturing Market''.

The report emphasizes on adopting global best practices such as outsourcing accounting and compliance, the urgent need for re-considering the net worth criteria set for obtaining a mutual fund license and the cap on expenses that can be charged to a Scheme, and bridging the demand and supply gap of human assets.

If the recommendations in the report turn into reality, it will help in attracting new investors contributing to the increase in the mutual fund investment pie, a release issued by CII and PWC said.

With the high cost of operations in the initial years and a relatively longer gestation period, there is a case for re-consideration of Rs 10 crore net worth criteria set from the present Rs. 2 crore for obtaining a mutual fund license. This would ensure that only major and serious players who are committed to the mutual fund industry and are capable of sustaining over the long term would be able to operate in the industry.

The CII-PWC report also highlights the industry's challenges for the future. One of the biggest challenges for existing as well as new players is the mounting costs of operations in India.

The second biggest challenge, or in some cases even the largest, to the operational costs would be staff costs. In the area of mutual fund operations, there are just not enough experienced resources around. To get the best talent is difficult but to retain them is even more daunting, the report notes.

A right combination of top performance, extensive reach to the retail investor and investments in investor education will open up new frontiers for the mutual fund industry. This supported by enabling regulations would be the perfect catalyst for growing and sustaining such growth over the next few critical years, culminating into 'Vision 2015' for maturing of the mutual fund industry, the report added.

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