Opportunities and Challenges-Mutual Fund Penetration

Brief analysis report-Penetration of Mutual Funds in India: Opportunities and Challenges

An enquiry conducted by Development Research Group about mutual funds in India, titled ‘opportunities and challenges faced by mutual funds’ revealed that, financial literacy has a major role in improving MF penetration.


Major findings are listed below:

Mutual fund presence is heavily skewed in favour of 60 districts, out of which a lion’s share originates from Mumbai.

Adult literacy or bank penetrations (savings account) do not show any strong correlation with mutual fund penetration, indicating that banks are not being utilized as effective delivery channels.

As per the survey, low levels of financial literacy, cultural attitudes towards savings and investments, lack of demand from the general retail investor or due to lack of available manpower outside major cities are found to be the reasons restricting MF growth outside cities.

Lack of good talent for training and hiring mutual fund agents and lack of investor awareness and financial sophistication of investors are the major concerns faced by MF’s outside major top cities.



Awareness campaigns in partnerships with colleges will help to inculcate financial knowledge at young age.

Starting MF ‘education centers’ in smaller towns could serve as counseling centers and provide fund updates, NAVs across AMCs.

By making mutual funds more tax-efficient and friendly, more investors can be attracted and hence, penetration can be increased.


Complete report can be viewed here : http://www.sebi.gov.in/cms/sebi_data/DRG_Study/OpportunitiesChallenges.pdf




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