Challenges and issues faced by Indian Mutual Fund Industry

Abstract

The challenges which the mutual fund industry had to face are low customer awareness and financial literary pose which act as the biggest challenge to channelize the household savings into mutual funds. Further the fund houses have show limited focus on increasing retail penetration and building retail AUM. Most AMCs generally focus on the top 20 cities that is manifested in limited distribution channels and investors servicing. Further multiple regulatory frameworks governs different verticals within the financial service sector, such as different policies pertaining to the pan card requirements, mode of payment, funds management by insurance companies and commission structures, among others. Factors that are impediment to the mutual fund investing are the availability of the large number of mutual fund schemes that makes investment decision complex and difficult, complicated KYC norms that restricts potential investors and quality of advice provided. There is a need for collaborative efforts across all key stakeholders to harness the future growth potential and reach out to the customers. Key words: Mutual fund, Growth Fund, Balanced Fund, Income Funds, Professional Management, Asset Management companies.

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