Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
–TheFutureinaDynamicEnvironment
Outlookfor2015
JUNE 20 09
Table of Contents
1. Executive Summary 01
2. The Indian Mutual Fund Industry - Current State 03
3. Challenges and Issues 10
4. Voice of the Customer 15
5. Future Outlook in a Dynamic Environment 20
6. Action Plan for Achieving Transformational Growth 26
7. Summary 32
Preface
TheIndianmutualfundindustryhaswitnessedsignificantgrowthinthe
pastfewyearsdrivenbyseveralfavourableeconomicanddemographic
factorssuchasrisingincomelevelsandtheincreasingreachofAsset
ManagementCompanies(AMCs)anddistributors.However,afterseveral
yearsofrelentlessgrowth,theindustrywitnessedafallof8percentin
theassetsundermanagementinthefinancialyear2008-09thathas
impactedrevenuesandprofitability.
Recentdevelopmentstriggeredbytheglobaleconomiccrisishave
servedtohighlightthevulnerabilityoftheIndianmutualfundindustryto
globaleconomicturbulenceandexposedourincreaseddependenceon
corporatecustomersandtheretaildistributionsystem.Itisthereforean
opportunetimefortheindustrytodwellontheexperiencesanddevelop
aroadmapthroughacollaborativeeffortacrossallstakeholders,to
achievesustainedprofitablegrowthandstrengtheninvestorfaithand
confidenceinthehealthoftheindustry.InnovativestrategiesofAMCs
anddistributors,enablingsupportfromtheregulatorSEBI,andpro-active
initiativesfromtheindustrybodiesCIIandAMFIarelikelytobethekey
componentsindefiningthefutureshapeoftheindustry.
ThisreportsummarisesthecurrentstateoftheIndianmutualfund
industryhighlightingthekeychallengesandissues.Wehavealso
presentedthe‘VoiceofCustomers’tounderstandtheirneedsand
prioritiesastheindustrydefinesthefutureroadmapfor2015.Thereport
outlinesanactionplanforkeystakeholderssoastosurpassexpectations
ofindustrygrowthandprofitability.
KPMGacknowledgestheinputsreceivedfromAMCs,distributors,
customersandserviceprovidersforthisreport.
KPMGisprivilegedtobeassociatedwiththeCIIMutualFundSummit
2009asKnowledgePartneronthetheme’IndianMutualFundIndustry–
TheFutureinaDynamicEnvironment’.
Abizer Diwanji
Head – Financial Services
KPMG in India
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Foreword
Relativelylowpenetrationlevelscombinedwithrapidgrowthinthe
assetsundermanagementinrecentyearspointtothehighgrowth
potentialoftheIndianmutualfundindustry.
Therecentdevelopmentsofthepastfewmonths,triggeredbytheglobal
economiccrisis,haveshownthattheIndianmutualfundindustryisnot
decoupledfromglobaldevelopments.Thefinancialturmoilhasservedto
highlightthebenefitsofinvestinginmutualfunds,inparticular,in
comparisonwithdirectlyinvestinginstocks.
Goingforward,theIndianmutualfundindustryisexpectedtosecure
growthbycateringtotheevolvingaspirationsofretailcustomers.The
industryseekstotargetanincreasedshareofthecustomerwallet
throughproductinnovationcombinedwithdeeperretailpenetrationby
expandingreachintoTier2andTier3towns.Theindustrywillneedto
incorporatecapitalsafetyfeaturesinproductdesign,buildstrongbrands
thatarehallmarksoffinancialintegrity,serviceorientationandsustained
fundperformance.Buildinginvestors’trustandincreasedcustomer
awarenessthroughinitiativesaimedatpromotingfinancialliteracywillbe
criticalfactorstowardsbuildinggreaterretailparticipation.
Itisthereforeanopportunetimefortheindustrytointrospectonthe
learningsandexperiencesofthepastdecadeanddeveloparoadmap
throughacollaborativeeffortacrossallstakeholders,toachievesustained
profitablegrowth.
Wehopeyouwillfindthisreportinterestinganduseful.
U K Sinha
Chairman – CII National Committee on Mutual Funds
Chairman and Managing Director, UTI Asset Management Company Limited
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Page1
1. Executive Summary
Current State
Indiahasbeenamongstthefastestgrowingmarketsformutualfundssince2004,witnessingaCAGRof29
percentinthefive-yearperiodfrom2004to2008asagainsttheglobalaverageof4percent.Theincreasein
revenueandprofitability,however,hasnotbeencommensuratewiththeAUMgrowthinthelastfiveyears.
Lowshareofglobalassetsundermanagement,lowpenetrationlevels,limitedshareofmutualfundsinthe
householdfinancialsavingsandtheclimbinggrowthratesinthelastfewyearsthatareamongstthehighestin
theworld,allpointtothefuturepotentialoftheIndianmutualfundindustry.
Distributorsandthemutualfundhouseshaveexhibitedlimitedinterestincontinuouslyengagingwith
customerspostclosureofsaleasthecommissionsandincentiveshavebeenlargelyintheformofupfront
feesfromproductsales.Limitedfocusofthepublicsectornetworkincludingpublicsectorbanks,IndiaPost
etcondistributionofmutualfundshasalsoimpededthegrowthoftheindustry.Furthermultipleregulatory
frameworksgoverndifferentverticalswithinthefinancialservicessector,suchasdifferentialpoliciespertaining
tothePANcardrequirement,modeofpayment(cashvscheque),fundsmanagementbyinsurancecompanies
andcommissionstructures,amongothers.
Factorsthatareimpedimentstomutualfundinvestingareavailabilityofalargenumberofmutualfunds
schemesthatmakesinvestmentdecisioncomplexanddifficult,complicatedKYCnormsthatrestrictpotential
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Page2
investors,andqualityofadviceprovided.Aftersalesserviceandongoingfollowuphavebeenidentifiedby
customersasthekeydifferentiatorsinassessingthecapabilitiesofdistributors.
Driversforpurchaseofmutualfundsincludetaxbenefitsofmutualfundinvestments,consistencyinfund
performanceandbrandequity.Simplificationofprocessessuchastheapplicationandredemptionprocess
couldpotentiallyincreasethequantumofinvestmentsinmutualfunds.
Industryprofitabilitymayreducefurtherasrevenuesshrinkandoperatingcostsescalate.Productinnovationis
expectedtobelimited.Marketdeepeningandwideningisexpectedwiththeobjectiveofincreasedretail
penetrationandparticipationinmutualfunds.Theregulatoryandcomplianceframeworkformutualfundsis
likelytogetalignedwiththeotherframeworksacrossthefinancialservicessector.
Giventhatcustomerawarenessisthepre-requisitefortheachievementoftheindustrygrowthpotential,there
isaneedforplanning,financingandexecutinginitiativesaimedatincreasingfinancialliteracyandenhancing
investoreducationacrossthecountrythroughasustainedcollaborativeeffortacrossallstakeholders,thatis
expectedtoresultinamassiveincreaseinmutualfundpenetration.AMCsshouldfocusonproductinnovation
andintroductionofflexibilityinpricing.
PublicsectorthrustintomutualfundsdistributionandfocusonstrengtheningpresencebeyondTier2citieswill
entailtrainingofthepublicsectoremployeebasethroughthe“TraintheTrainer”approach,sothattheymaybe
inductedastrainerstosupportcustomerawarenesscampaignstobefacilitatedbyCII,NISMandAMFI.
OpeningupofthepublicsectorbranchnetworkinTier3andTier4townswillincludeIndiaPost,Nationalised
Banks,RegionalRuralBanksandCooperativeBanks.ThiswillalsorequireaboosttobeprovidedtoInvestor
ServiceCentres(ISCs)throughR&TAgentsshouldbegivenathrust.
Focusonincreasingcustomerengagementpreandpostcompletionoftheinvestmentwillbebeneficial.CII
andAMFIshouldhelptosteertheindustryvision.TherecognitionoftheAssociationofDistributorsbySEBI
wouldalsobebeneficialforthelongtermwellbeingoftheindustry.
Itisproposedthatharmonisationofpoliciesacrossmultipleregulatoryframeworksinthefinancialservices
sectormustbetakenuponhighprioritythroughconstitutionofaSteeringCommitteeundertheaegisofthe
MinistryofFinance,comprisingtheFinancialServicesRegulatorsformutualfundsandcapitalmarkets,
pension,insurance,bankingandotherverticalsalongwithrepresentationfromtheCBDT.
Giventhattheindustryneedstocollectivelyworktowardsridingoverthedynamicandrelativelylessfavourable
economicenvironmentatpresent,thenextphasefortheindustryislikelytobecharacterisedbyastronger
focusoncustomercentricity,costmanagementandrobustgovernanceandregulatoryframework-allaimedat
enablingtheindustrytoachievesustained,profitablegrowth,goingforward.
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Page3
1AMFIdata
2AMFIdata
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Page4
AUM Growth Rate in Select Countries AUM Base and Growth Relative To the Global
(CAGR for 2004-2008)
Industry
Indiahasbeenamongstthefastestgrowingmarkets
formutualfundssince2004;inthefive-yearperiod
from2004to2008(asofDecember)theIndianmutual
fundindustrygrewat29percentCAGRasagainstthe
globalaverageof4percent3.Overthisperiod,the
mutualfundindustryinmaturemarketsliketheUSand
Source: ICI Factbook 2009, AMFI data Francegrewat4percent,whilesomeoftheemerging
Note: Based on AUM as of 31 December
marketsviz.ChinaandBrazilexceededthegrowth
witnessedintheIndianmarket.
AUM to GDP Ratio for India
However,despiteclockinggrowthratesthatare
amongstthehighestintheworld,theIndianmutual
fundindustrycontinuestobeaverysmallmarket;
comprising0.32percentshareoftheglobalAUMof
USD18.97trillionasofDecember20084.
In2008,theUKhadmorethanthricetheinvestments
intomutualfundsasafactoroftotalhouseholdsavings
(26percent),thanIndiahadinthesametimeperiod.
AsofDecember2008,UKhouseholdsheld61percent
ofthetotalsavingsinbankdeposits,11.6percentin
equitiesand1percentinbonds7.
Source: RBI data
3ICIdata 6RBIdata
4ICIandAMFIdata 7DatamonitorReport,December2008
5AMFIandCSOdata
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Page5
Profitability
TheincreaseinrevenueandprofitabilityintheIndian
mutualfundindustryhasnotbeencommensuratewith
theAUMgrowthinthelast5years.TheAUMgrewat
35percentCAGRintheperiodfromMarch2005to
2009,whiletheprofitabilityofAMCs-whichisdefined
asPBTasapercentageoftheAUM-declinedfrom24
bpsinFY2004to14bpsinFY20088.
Theoperatingexpenses,asapercentageofAUM,rose
from41bpsinFY2004to113bpsinFY2008largely
Source: KPMG Analysis based on published financials of AMCs duetotheincreasedspendonmarketing,distribution
andadministrativeexpensesimpactingAMCmargins10.
Risingcostpressuresanddeclineinprofitabilityhave
impactedtheentryplansofglobalplayerseyeingan
Indianpresence.
ThegrowthinAUMaccompaniedbyadeclinein
profitabilitynecessitatesananalysisoftheunderlying
characteristicsthathaveabearingonthegrowthand
profitabilityoftheIndianmutualfundindustry.
Customers
TheIndianmutualfundindustryhassignificantlyhigh
ownershipfromtheinstitutionalinvestors.Retail
investorscomprising96.86percentinnumberterms
heldapproximately37percentofthetotalindustry
AUMasattheendofMarch200811,significantlylower
thantheretailparticipationintheUSat82percentof
AUMasatDecember200812.
Source: SEBI data
8KPMGAnalysisofpublishedfinancialstatementsofAMCswithAUMdata 10KPMGAnalysis
fromAMFI 11SEBI
9KPMGAnalysis 12ICI
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Page6
Outofatotalpopulationof1.15billion,thetotal
numberofmutualfundinvestoraccountsinIndiaasof
31March2008was42million(theactualnumberof
investorsisestimatedtobelowerasinvestorshold
multiplefolios)13.IntheUS,anestimated92million
individualinvestorsownedmutualfundsoutofatotal
populationof305million14 in2008.
AspertheInvestIndiaIncomesandSavingsSurvey
2007ofindividualwageearnersintheagegroup18to
59yearsconductedbyIIMSDataworks,only1.6
percentinvestedinmutualfunds.Ninetypercentofthe
saversinterviewedwerenotawareofmutualfundsor
ofinvestinginmutualfundsthroughaSystematic
InvestmentPlan(SIP).Themutualfundpenetration
amongthepaidIndianworkforcewithannual
householdincomelessthanINR90,000was0.1
percent.
Inthelastfewyears,theretailinvestorparticipation,in
particular,inTier2andTier3towns,hasbeenonthe
riseaidedbythebuoyantequitymarkets.
Debtproductsdominatetheproductmixand
Source: AMFI data
comprised49percentofthetotalindustryAUMasof
FY200915,whiletheequityandliquidfundscomprised
26percentand22percentrespectively.Open-ended
fundscomprised99percentofthetotalindustryAUM
asofMarch2009.
AsofDecember2008,theUSmutualfundmarket
comprisedmoneymarketfunds,equityfunds,debt/
bondfundsandhybridfundsat40,39,16and5
percentofthetotalAUMrespectively16.
13SEBI
14ICI,CIA
15SEBI
16ICIFactbook2009
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Page7
WhiletraditionalvanillaproductsdominateinIndia,new
productcategoriesviz.ExchangeTradedFunds(ETFs),
GoldETFs,CapitalProtectionandOverseasFundshave
graduallybeengainingpopularity.AsofMarch2009,
Indiahadatotalof16ETFs(0.3percentoftotalAUM)
Number of Distributors by Category Registered Annually by whiletheUShadatotalof728ETFsasofDecember
AMFI 200817.
Markets
WhilethemutualfundindustryinIndiacontinuestobe
metroandurbancentric,themutualfundsare
beginningtotapTier2andTier3townsasavital
Source: AMFI data componentoftheirgrowthstrategy.Thecontributionof
Note: Data as of 31 March for every year except for December 2002
theTop10citiestototalAUMhasgraduallydeclined
fromapproximately92percentin2005to
approximately80percentcurrently18.
Industry Structure
TheIndianmutualfundindustrycurrentlyconsistsof38
playersthathavebeengivenregulatoryapprovalby
SEBI.Theindustryhaswitnessedashifthaschanged
drasticallyinfavourofprivatesectorplayers,asthe
numberofpublicsectorplayersreducedfrom11in
2001to5in2009.
Source: AMFI data
17AMFIdata,ICIFactbook2009 20CIIMutualFundSummit2008quotedfromCerulliAssociates
18Industrydiscussions 21AMFIdata
19AMFIandIRDAdata
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Page8
Theindustryconcentrationhasbeenstagnantinthe
four-yearperiodfrom2005to2008;thetop5players
comprising50-52percentofindustryAUM.However,
asofMarch2009,theshareofTop5playersincreased
to58percent,asagainst38percentintheUS.The
AUMshareoftheTop10playershasconsistentlybeen
inthevicinityof75percent.23
Themutualfundhousesbasedonproductportfolioand
Source: AMFI data distributionstrategy,thekeyelementsofcompetitive
strategy,canbesegmentedintothreecategories:
•Playershavingdominantfocusonasingleproduct
segment-debtorequity
•Playershavingnichefocusonanemergingproduct
categoryordistributionchannels.
Themarketleadershavefocusedacrossproduct
categoriesforamorediversifiedAUMbasewithan
Source: KPMG analysis based on AMFI data
equitableproductmixthathelpsmaintainaconsistent
AUMsize.
AlthoughtheIndianmarkethasrelativelylowentry
barriersgiventhelowminimumnetworthrequiredto
Administrative & Other Expenses as a percentage of AUM ventureintomutualfundbusiness,existenceofa
stronglocalbrandandawideanddeepdistribution
footprintarethekeydifferentiators.
Operations
TheIndianmutualfundindustrywhileonahighgrowth
pathneedstoaddressefficiencyandcustomer
centricity.AMCshavesuccessfullybeenusing
outsourcedserviceproviderssuchascustodians,
RegistrarandTransferAgents(R&T)andmorerecently,
Source: KPMG analysis based on public financials of AMCs fundaccountants,sothatmutualfundscanfocuson
22AMFIdata
23AMFIdata
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Page9
coreaspectsoftheirbusinesssuchasproductdevelopmentand
distribution.Functionsthathavebeenoutsourcedarecustodyservices,
fundservices,registrarandtransferservicesaimedatinvestorservicing
andcashmanagement.Managingcostsandensuringinvestor
satisfactioncontinuetobethekeygoalsforallmutualfundstoday.
However,thereislikelytobescopeforoptimisingoperationscostsgiven
thetrendofrisingadministrativeandassociatedcostsasapercentageof
AUM.
Regulatory Framework
TheIndianmutualfundindustryintermsofregulatoryframeworkis
believedtomatchuptothemostdevelopedmarketsglobally.The
regulator,SecuritiesandExchangeBoardofIndia(SEBI),hasconsistently
introducedseveralregulatorymeasuresandamendmentsaimedat
protectingtheinterestsofthesmallinvestorthataugurswellforthelong
termgrowthoftheindustry.
TheimplementationofPreventionofMoneyLaundering(PMLA)Rules,
thelatestguidelinesissuedinDecember2008,aspartoftherisk
managementpracticesandproceduresisexpectedtogainfurther
momentum.ThecurrentAntiMoneyLaundering(AML)andCombating
FinancingofTerrorism(CFT)measurescovertwomainaspectsofKnow
YourCustomer(KYC)and‘suspicioustransactionmonitoringand
reporting’.
Theregulatoryandcomplianceambitseekstodwellonarangeofissues
includingthefinancialcapabilityoftheplayerstoensureresilienceand
sustainabilitythroughincreaseinminimumnetworthandcapital
adequacy,investorprotectionandeducationthroughdisclosurenormsfor
moreinformationtoinvestors,distributionrelatedregulationsaimedat
introducingmoretransparencyinthedistributionsystembyreducingthe
informationgapbetweeninvestorsanddistributors,andbyimprovingthe
mechanismfordistributorremuneration.
ThesuccessoftherelativelynascentmutualfundindustryinIndia,inits
marchforward,willbecontingentonfurtherevolvingarobustregulatory
andcomplianceframeworkthatinsupportingthegrowthneedsofthe
industryensuresthatonlythefittestandthemostprudentplayers
survive.
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Page10
KPMG,throughdiscussionswiththeindustryparticipants,hasattempted
“Mutual funds are still sold, toidentifyandhighlightsomeofthekeyissuesandchallengesbeing
not bought.” facedbytheindustryparticipantsthatarepreventingtheindustryfrom
- A large national distributor harnessingitstruegrowthpotential.
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Page11
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Page12
buildingtheirbranchpresenceandstrengtheningdistributionreach
“Fees should only be on trail
throughnon-branchchannels.
basis so that advisors are
compensated based on ongoing Limited Innovation in Product Offerings
advice and service provided.” TheIndianmutualfundindustryhaslargelybeenproduct-ledandnot
- A large IFA sufficientlycustomerfocused.ThepopularityofNFOstriggereda
proliferationofschemeswithalargenumberofnon-differentiated
“There is a tendency to push products.Theindustryhashadalimitedfocusoninnovationandnew
select products during specific productdevelopment,therebycateringtothelimitedneedsofthe
economic cycles. Debt products customer.Productsthatcaterspecificallytocustomerlifestageneeds
are seldom sold during a stock suchaseducation,marriage,andhousingareyettofindtheirwayinthe
market boom.” Indianmarket.
- A large regional distributor
DespitetheregulationsforRealEstateMutualFunds(REMF)being
introducedin2008,themarketisstillawaitingthefirstREMFlaunch.
“AMCs must focus on investor
Further,relativelynascentproductcategoriesviz.multi-managerfunds
education so that they can
thatareamongthemostpopularhybridfundsgloballyhavenotgrownin
challenge distributors.”
Indiaowingtotheprevailingtaxationstructure.
- A large AMC
TheIndianmutualfundindustryofferslimitedinvestmentoptionsviz.
capitalguaranteeproductsfortheIndianinvestors,alargemajorityof
Fee structures in the US Mutual Fund
Market - A case study whomareriskaverse.TheIndianmarketisstilltowitnessthelaunchof
IntheUSmutualfundmarket,financial greenfunds,sociallyresponsibleinvestments,fundofhedgefunds,
advisorsareprofessionalswhohelp enhancedmoneymarketfunds,renewableandenergy/climatechange
investorsdefinetheirinvestmentgoals,
selectsuitablefundsbasedonrisk funds.
appetite,andprovideongoingadviceand
service.Thesefinancialadvisorsare Limited Flexibility in Fees and Pricing Structures
compensatedfortheirservices,inpart,
ThefeestructureintheIndianmutualfundindustryenjoyslittleflexibility
throughaspecificfee,knownasa12b-1
fee,whichisincludedinafund’s unlikedevelopedmarketswherethelevelofmanagementfeesdepend
expenseratio.Inaddition,no-loadfunds
onavarietyoffactorssuchastheinvestmentobjectiveofthefund,fund
aresolddirectlytoinvestorsoraresold
toinvestorsthroughfinancialadvisors assets,fundperformance,thenatureandnumberofservicesthatafund
whochargeinvestorsseparatelyforthe
offers.Whiletheexpenseshavecontinuouslyrisen,themanagementfee
investmentadviceandserviceprovided,
therebyprovidingflexibilitytothe levelshaveremainedstagnant.
investor,basedonthelevelofadvice
andservicesought. Distributorsarecompensatedfortheirservicesthroughafixedchargein
Advisorsarecompensatedforproviding theformofentryloadandadditionalfeesasconsideredappropriateby
theseservicesthroughacombinationof
front-endorback-endloadsand
theAMC.Regardlessofthequalityofadviceandserviceprovided,the
12b-1fees.Investorswhooptnottouse
commissionpayablebythemutualfundcustomertothedistributorsis
afinancialadvisororthosewhopaythe fixed.
financialadvisordirectlyforservices
rendered,purchaseno-loadfunds,which Limited Customer Engagement
haveneitherfront-norback-endloads
andhaveeitherloworno12b-1fees. Mutualfunddistributorshavebeenfacingquestionsontheir
Source: ICI competence,degreeofengagementwithcustomerandthevalue
providedtothecustomer.
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Page13
Intheabsenceofaframeworktoregulatedistributors,boththe
“AMFI must focus on defining distributorsandthemutualfundhouseshaveexhibitedlimitedinterestin
the industry vision and long-term continuouslyengagingwithcustomerspostclosureofsaleasthe
strategic direction.” commissionsandincentiveshadbeenlargelyintheformofupfrontfees
- A mid-sized AMC fromproductsales(althoughtrailcommissionshavealsobeenpaidin
limitedinstancesregardlessoftheservicerendered).Asaresultofthe
limitedengagement,therehavebeenrisinginstancesofmis-sellingto
customers.
“Valuations in the Indian mutual Limited Focus of the Public Sector Network on Distribution of Mutual
fund industry should be based on Funds
EBITDA multiples and not on the Publicsectorbankswithalargecaptivecustomerbase,significantreach
basis of AUM alone.” beyondtheTop20citiesinsemi-urbanandruralareas,andthepotential
- A large AMC tobuildtheretailinvestorbase,havesofarplayedaverylimitedrolein
mutualfundsdistribution.
TheIndiaPostnetworkoperatingthelargestpostalnetworkintheworld
majorityofwhichisinruralareas,isstatedtohave250postoffices
“PAN card being made sellingmutualfundsoffiveAMCsonly;furthermostofthepostoffices
mandatory is a deterrent to sellingmutualfundsarelocatedinTier1andTier2citieswhichare
industry growth.” alreadybeencateredto,bynationallevelandotherdistributors24.India
- A large national distributor Postwithitscustomerbaseof170millionaccountholdersandbranch
networkofover154,000branches,doublingthesizeofallbankbranches
puttogetherisaformidablechannelwhichhasbeenunderutilisedto
dateformutualfunddistribution25.Thepostalnetworkalsoservesasa
FurtherthecredibilityenjoyedbytheNationalisedBanks,RegionalRural
BanksandCooperativeBanksintheruralhinterlandhasnotbeenfully
leveragedtotargettheretailsegment.
“Manufacturers need to
Multiple Regulatory Frameworks Governing Financial Services Sector
increase the level of engagement Verticals
with customers and play a much Theregulatoryandcompliancerequirementsvaryacrossverticalswithin
larger role beyond sales.” thefinancialservicessectorspecificallymutualfunds,insuranceand
- A small AMC
pensionfundseachofwhicharegovernedbyanindependentregulatory
frameworkandarecompetingforthesameshareofthecustomer’s
wallet.Themutualfundindustrylacksalevelplayingfieldincomparison
withotherverticalswithinthefinancialservicessector.
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Page14
ThemandatoryPANcardrequirementforinvestinginmutualfundsis
perceivedtorestrictsignificantpotentialofthemutualfundindustryin
beingabletotapsmallticketinvestorsfrominvestinginmutualfunds.
Ontheotherhand,ULIPswhicharedeemedtobecompetingproducts
donothavethemandatoryPANrequirement.
Whilethepaymentforinvestmentintomutualfundscanbemadeonly
throughbankingfacilities,thepurchaseofULIPscanbeundertaken
throughcash.
TherecentlyintroducedNPSregulationsrequiringtheAMCstocreatea
separatelegalentityforpensionfundsmanagementhascreatedan
additionalcoststructureforthemutualfundplayers.
OutsourcingfundsmanagementinexcessofINR80billionbyinsurance
companiesisnotpermittedandthusrestrictsanadditionalrevenue
opportunityforthemutualfundindustry.
Insummary,thechallengesandissuesfacedbytheIndianmutualfund
industrywillneedtobeaddressedattheearliesttoensurelongterm
sustained,profitablegrowthoftheindustry.
24IndiaPost
25IndiaPost
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Page15
Methodology
TounderstandthevoiceoftheIndianinvestors,CII-KPMGconductedan
investorsurveyacrosstheTop10citiesinIndiainMay2009.Aspartof
thissurvey,CII-KPMGfacilitatedinterviewswithalargerepresentative
sampleofpopulationfromdiversebackgrounds(education,age,
occupationandgender)tounderstandtheirpreferencesandperspective
oninvestmentinmutualfunds.
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Page16
Thesurveyhashighlightedseveralreasonsthat
Source: CII-KPMG Survey in May 2009
respondentshavecitedfornotbuyingmutualfunds.
Someoftheprominentchallengeshighlightedbythe
respondentshavebeenlistedbelow.
26AMFIdata
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Page17
complexterminologyandthepaperworkinvolvedin
“Last time I wanted to invest some mutualfundinvesting.
money in MF, the fund house asked me Further,thisregulatorydirectiveisviewednegativelyby
for so many documents that I got totally potentialcustomersasinvestmentsininsurance
productscanbeundertakenwithouttherequirement
confused and wondered why I should
foraPANcard.Hence,thereisurgentneedforthe
share so much with them?” Governmenttofacilitateharmonisationofpoliciesand
- Businessman processesacrossdifferentverticalsinthefinancial
Tier 1 city servicessectorandtosimplifydocumentationthat
Not an investor in mutual funds couldtherebyeasetheprocessofmutualfund
investmentsforretailcustomers.
Itisimportanttonotethatanoverwhelmingmajorityof
thecustomershavenotbeensatisfiedwiththequality
ofadvicebeingprovidedtothembytheadvisors.
SomecustomersareoftheviewthattheIFAsareless
qualifiedanddonotadoptaholisticapproachto
Source: CII-KPMG Survey in May 2009
financialplanning.Insomecases,customershave
reportedinstancesofmis-sellingthathasaffectedthe
performanceoftheirportfoliossignificantly.Hence,itis
imperativefordistributorstore-lookattheirstrategyfor
“I had some money in PPF and wanted to financialplanninganddispensingadvicetocustomers.
invest in something which gives good Aftersalesserviceandongoingfollowuphavebeen
returns with balanced risk, so I chose MF, identifiedbycustomersasakeydifferentiatorin
assessingthecapabilitiesofdistributors.
it is working for me”
- Salaried Person Drivers for Investment in Mutual Funds
Tier 1 City Thefactorsthatcanincentivisepotentialcustomersto
Investor in Mutual Funds commenceandgraduallyincreasetheirinvestmentin
mutualfundsarediscussedbelow.
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Page18
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Page19
“ Customers’ Wish-list from Mutual Funds, Distributors, Regulator and Government - In the Words of Customers27
Mutual Fund Products
• Iwantprotectiveproductswithguaranteedincomeandgoodabsolutereturns.
• Asaretiredperson,Iwantmoredebtfundsoptionswithasafemechanismofregularsavingalongwiththevaried
pensionoptions.
• Iwantassuredreturnsschemesthatareamixofrisk-freeandhigh-riskportfoliowhereIcaninvestsmallsumsof
money.
• Iwantaclearandeasyexplanationofvariousschemes.
Funds Management
• Iwanttolistentofundmanagers’viewsonoutlookforvarioussectors,industryperformance,fundperformance,etc.
buthaveneverbeeninvitedbyanyfundhouseforthis.
• AMCsshouldnotdependontheFundManagerbutitsprocessforthesuccessoftheirproducts.
Investor Servicing
• IwanteasyaccesstotheFundHousefordirectsubscriptionsinceIdonotwanttopayentryload.
• IwantbetterservicefromthefundhouseintermsofNAVupdatesthroughweeklySMSalertssothatIknowthe
valueofmyinvestments.
• Iwantalltheservicesatmydoorstep-rightfromgettinghelpinfillingintheapplicationformtodepositingacheque
formyinvestments.
• Wewanttointeractwithmoreknowledgeablepeopleatthecallcenterstoattendtoourcomplaintsfromatechnical
perspective,andnotjusttohandleroutineoperationallevelproblems.
• AMCsshouldsendareporttomeonmyinvestmentstatusandperformanceonatimelyandregularbasis
• Ibelieveagentscommissionshouldbelinkedtoinvestorsatisfactionandattractivenessofthefundsuggested,which
shouldbepayableinphases,dependinguponthesuccessoftheadviceprovided
• Pleasereduceandsimplifythedocumentationrequiredandtheprocessesinvolvedandhelpmetounderstandthe
purposeforwhichthiswillbeused.
Investment Advice
• SinceImakemyowninvestmentdecisionswithoutrelyingonanyone’sadvice,Iwantasingleplatformfortransacting
andperformancemonitoring,totrackmymutualfundinvestmentsacrossvariousAMCs.
• Iwantobjectiveadvicethat’sbestsuitedtomyneedsandwhichisnotdrivenbycommissionsreceivedbymyadvisor.
• Aslongasthefundhousepaysthecommissiontotheadvisor,thereisalwaysaconflict.Howcananyoneprovide
unbiasedadviceiftheyarepaidbythefundhouseforadvisingme?Thisensuresthattheadvisorisactinginthefavor
ofthefundhouseandisnotdrivenbymyinterestsandneeds.
Regulator Intervention
• CanSEBIprovidemewithCertificationofFundmanagers,toassuremeofhighqualitymanagementofmyfunds?
• IwantSEBItoprovidemewithalistofregistereddistributorsontheirwebsitesinceIdonotknowifmyadvisoris
certifiedandqualifiedtoadviseme.
• CanSEBIputinplaceamechanismthroughwhichwecanrelyupontheadviceprovidedbytheMutualFundagent?
• MyadvisorhasgivenmeincorrectadviceowingtowhichIhavelostmoney.HowdoIensurethathegetspenalised
forthelosscausedwithhisincorrectadvice?
Tax Benefits
• WhyamIrequiredtopaySecuritiesTransactionTax?
• WhyshouldIberequiredtopaylong-termcapitalgaintaxonmydebtfundswhenIamnotrequiredtopaythison
equityfunds?
• TheGovernmentmustprovideafavourabletaxregimeforFundofFundsthatimpliesextendingtaxbenefitsto
investorsandalsotothefunds.
• TheGovernmentmustprovidetaxsopstoencourageinvestmentinequity(includingoverseasequity)asalongterm
savingandtoencourageinvestmentsintheinfrastructuresector(debtaswellasequity);taxsopsshouldalsobe
extendedtoschemesinvestingintheseareasaswell.
“
27CII-KPMGSurveyonMutualFunds,May2009
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Page20
Growth Drivers
Althoughseveralmacroeconomicanddemographicfactorsaffectthe
growthoftheindustry,thekeyunderlyingdriverforallthecategoriesof
fundsisthekeyeconomicindicator–theGDPgrowthrate.
Thegrowthdriversforcustomersegmentshavebeenlistedinthetable
belowalongwiththeexpectedimpactofeachontheAUM.
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Page21
Industry AUM is likely to continue to grow in the range of 15 to 25 percent from the period 2010 to 2015
Keygrowthdriversforthisscenarioinclude:
•Increasedretailinvestorparticipationwitha
preferenceformutualfundsoverotherasset
classesperceivedtobemorerisky.Thiscouldresult
inthefulfilmentofgrowingfinancialaspirations,
enabledbyrisingdisposableincomesandincreased
financialsavings
Source: KPMG analysis
• Innovationsindistributiondrivenbyincreaseinthe
numberofcertifiedIFAsandbankssellingmutual
fundsfocusingonTier2andTier3towns
28Discussionswithkeyindustrystakeholdersandcustomers
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Page22
Intheeventofarelativelyslowereconomicrevival
resultingintheidentifiedgrowthdriversnotreaching
theirfullpotential,KPMGinIndiaisoftheviewthat
theIndianmutualfundindustrymaygrowintherange
of15-18percentintheperiodfrom2010to2015,
resultinginAUMofINR15,000to17,000billionin
2015.
Keyfactorsdrivingthegrowthinspiteoftheslow
revivaloftheeconomyinclude:
Source: KPMG analysis
•Incrementalincreaseinretailinvestorparticipation
owingtolimitedfocusbeyondTier2townsand
limitedeffortstodrawriskaversecustomersof
traditionalproductsunderthefoldofmutualfunds
• Tighteningofliquidityleadingtobetteryieldson
instrumentsliquidfundsinvestin,therebydriving
investmentsfromtheinstitutionalinvestors.
•Declineininvestmentmanagementfeesisexpected
asriskaversecustomerspreferinvestmentsindebt
products
• Increaseindistributioncostsasplayersattemptto
setuptheirownbranchpresenceinsmallertowns
• Existingplayersarelikelytoreviewbusiness
strategyandexploreexit/mergersincaseofno
significantcompetitiveadvantage,therebyresulting
inindustryconsolidation
• Competitionisexpectedtointensifyfurtherwiththe
entryofglobalplayerswhoarefacingstagnant
growthinglobalmarkets.Thisisexpectedtoresult
inafallinmarketsharesoftheTop10playersand
resultinafurthersqueezeonmargins
• Co-existenceoflargeplayerswithdiversified
portfoliosandsomenicheplaysexpected.
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Page23
•Highmarginproductssuchasequityandselectdebtproductslikelyto
continuetocontributeasignificantshareofindustryAUM
• FlexibilityinproductpricingbyAMCsexpectedtobepermittedbased
onthetypeofservicesoffered
• EmergingproductcategoriessuchasETFs,Multimanagerfunds,
REMFs,outcome-orientedfundssuchasprincipal-protected,tax-
managedandinflation-indexedfunds,expectedtohavemarginalshare
ofAUMinspiteofrapidgrowth.
• Possibilityofintroducingmandatoryratingformutualfundproducts
throughRatingagencieslikelytoincreaseinvestorconfidence
• Effortsexpectedtobeundertakenfordevelopingawellstructured
andwellmanagedregulated,debtmarketwhichshouldincreasein
depth.
Retail Segment
•Increasedfocusongrowinginvestorawarenessandincreasing
financialliteracyisexpected,resultinginanincreaseinthe
contributionoftheretailsegmenttotheindustryAUMintherangeof
46-48percentby2015,from36percentasof2008asmentioned
earlier
• Domesticplayersexpectedtotaptheoverseasmarketstogrowtheir
AUMthroughallianceswithglobalplayers
• HNIsandMassAffluentsegmentsmaydominatetheretailsegment
• Averageholdingperiodformutualfundsandaverageticketsizeof
investmentsinmutualfundslikelytoremainunchanged.
Institutional Segment
•Institutionalsegmentlikelytowitnesstheemergenceofanew
categoryofSMEsseekingadviceonmanagingtheirfunds.
Market focus
•GreaterparticipationexpectedfromTier2citiesandTier3towns,
includingruralcentres
• Shareoftop10citiesintotalAUMexpectedtodeclineasretail
investorsfromsmallercities,townsandruralareasjointhemutual
fundfold.
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Page24
Banks
•Thepublicsectornetworkofnationalisedbanksandpostofficeslikely
toincreasetheirfocusonthedistributionofmutualfunds
• Entryofpublicsectorbanksasmutualfundmanufacturersexpected
toincreasetheirfocusonmutualfunddistribution
• PrivatebanksprovidingfinancialadvicetoHNIsexpectedtomarginally
increasetheirmarketshare.
IFAs
•IFAsexpectedtoemergeasadominantchannelinascenarioof
robuststockmarketgrowth,focusingonincreasingpenetration,and
willthereforehavetofocusoninitiativestodevelopandsupportthis
channel(forexample,recruitmentandtrainingsupport).
Other channels
•Indialikelytowitnesstheentryofglobalfundsuper-marketsenabled
byregulatorychanges
• Cooperativesector,thoughbesetwithinternaladministrativeissues,
likelytoemergeasanotherchannelwhichshouldbetappedby
MutualFunds
• TappingthelargenetworkofNGOs,recognisedbylocalauthoritiesto
interactandreachouttothelowermiddleclassandpoorersegments
ofpopulationtoincreasemutualfundpenetration
• Distributorslikelytoexplorethepossibilityofinnovationssuchasa
commononlineplatformandtheusageofdebitandcreditcardsfor
transactions.
• Entryofpublicsectorbanksasmutualfundmanufacturersare
expectedtoincreasetheirfocusonmutualfunddistribution
• IFAsareexpectedtoemergeasadominantchannelfocusedon
increasingpenetration,andwillthereforehavetofocusoninitiatives
todevelopandsupportthischannel(forexample,recruitmentand
trainingsupport)
• IFAchannelsareexpectedtowitnessgrowthatafasterpacethan
banks
• PrivatebanksprovidingfinancialadvicetoHNIsexpectedtomarginally
increasetheirmarketshare
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Page25
• Distributorslikelytoexplorethepossibilityofinnovationssuchasa
commononlineplatformandtheusageofdebitandcreditcardsfor
transactions
• AMCsareexpectedtoinvestinchannelinnovationsuchasMobile
andInternetservices.Mobiletelephonyenablingmobiletransactions
forthepurchaseandsaleofmutualfundsandSMS-basedservicesis
expectedtorevolutionisetheindustry.
•RegulatorsacrossFinancialservicesspectrumviz.mutualfundsand
capitalmarkets,pension,insuranceandbankingexpectedtowork
towardsharmonisationofpolicies,withsupportfromindustrybodies
liketheCIIandtherespectiveindustryassociations
• Thrustoftheregulatoryandcomplianceframeworkexpectedtobeon
enhancingresilienceandsustainability,investorprotectionandgood
governancegoingforward.
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Page26
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Page27
Giventhatcustomerawarenessisthepre-requisitefortheachievementoftheindustrygrowthpotential,
thereisaneedforplanning,financingandexecutinginitiativesaimedatincreasingfinancialliteracyand
enhancinginvestoreducationacrosstheentirecountrythroughasustainedcollaborativeeffortacrossall
stakeholders.
Financing a Sustainable Nationwide Customer Awareness Program
• Creationofthe‘MutualFundEducationFund’–acommoncorpusoffundsfromAMCsanddistributors
throughmandatorylevyontheinvestmentmanagementfeeearnedbyAMCsandonthecommissions
earnedbydistributorsfrommutualfundsales
• ThisFundshouldbesuitablyring-fencedandmanaged/administeredbytheindustryassociation.
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Page28
TheobjectiveofproductinnovationbyAMCsshouldbedrivenbytheneedtointroducesimpleproductsto
attractandretainriskaverseandfirsttimeinvestorstostartinvestinginmutualfunds.
Introduction of Customer-Friendly Products and Product Features
• AMCsthroughAMFIshouldconductanationwidesurveyofcustomerneedsacrossliquidity,risk,
frequencyandquantumofcontributiontodetermineproductvariantsandfeaturesthatmeetcustomer
needs
• AllowinvestiblesurplusofinvestorstobeinvestedatanytimeinongoingschemeswithaflexibleSIP
option
• Introducesimpleproductsthathavefeaturesofcapitalprotectionwithreturnsthatarehigherthan
traditionalproductsandlimitmarketrisk
• Focusondesignofproductsaroundwomenandchildrenrelatedneeds,giventhegrowingdominanceof
womenininfluencinginvestmentdecisionsinhouseholdsacrossthecountry.Furthercommodityrelated,
croprelatedandagricultureorientedfundproductsmaybeconceptualisedanddevelopedbycaterto
segmentspecificneeds
• Focusonproductappealforthelowincomegroupbykeepingeaseofinvestmentandminimum
thresholdswithinaffordablelimits
• EncouragetheintroductionofcustomisedETFsforretailandinstitutionalcustomers
• Regulatoryframeworktoallownicheplayerstoco-existwithplayershavingadiversifiedproductportfolio
withoutraisingrequirementsforminimumnetworth.Theserequirementsarecommonattheindustry
level,irrespectiveofproductportfoliomix
• Enablemutualfundinvestmentsthroughmobiletelephony.
Pricing Flexibility
• Pricinginnovationsshouldfocusondistributorcompensationandadministration
• Enableflexibilityinregulationstoallowcustomerstopayfortheadviceandservicerenderedbythe
distributorsthroughvaryingarrangementsbasedonthemethodofpurchase,degreeofserviceprovided
andthetimeframeforpayment.Someoptionsincludeexploringthepossibilityofintroducingamultiple
shareclassstructurewithpricingoptionsforfront-endload,back-endloadandfixedannualfeeasa
percentageofallinvestments.
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Page29
Public Sector Thrust into Mutual Funds Distribution and Focus on Strengthening Presence Beyond Tier 2 Cities
Opening Up of the Public Sector Branch Network in Tier 3 and Tier 4 Towns
• CommencesaleofmutualfundsthroughthebranchnetworkofIndiaPost,NationalisedBanks,Regional
RuralBanksandCooperativeBanksbyfocusingonTier2andTier3townsinitially
• IndiaPosttosellmutualfundproductsofallSEBIregisteredAMCsinsteadoflimitingthecustomerto
fiveAMCsonlyasiscurrentlyprevalent
• BoostthepresenceofInvestorServiceCentres(ISCs)throughR&TAgentsinTier2andTier3townsand
utilisetheirpresencetopromotecustomerawarenessofmutualfunds.
Focus on Increasing Customer Engagement Pre and Post Completion of the Investment
• AMCstofocusongrowingtheIFAchannelandencouragethemtoreachouttoandengagewith
customersontheirmutualfundneedsonanongoingbasispreandpostcompletionoftheirinvestment
• AMCstofocusonenhancingthemarketingandadvisorycapabilitiesofalldistributorssothattheywin
thetrustandconfidenceofcustomers
• AMCsanddistributorstofocusonestablishingbaselevelfinancialplanningcapabilitiestofacilitatethe
transitionfromdistributionto‘advice’.
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Page30
Strengthening of Associations
Strengthening of AMFI
• AMFItoplayanactiveroleinbringingallthestakeholderstogetherandevolvingastrongvisionforthe
mutualfundindustryacrossalldimensions–aspirationalAUMgrowthandprofitability,retailpenetration,
productsandpricing,distributionchannels,operationsandcustomerservice,enabledbyasupporting
regulatoryframework
• AugmenttheemployeebaseofAMFIsoastosupportNISMinconductingnation-widecustomer
awarenesscampaigns.
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Page31
Harmonisation of Policies across Multiple Regulatory Frameworks in the Financial Services Sector
Constitution of a Steering Committee of Financial Services Regulators under the Ministry of Finance
• ItisproposedthattheGovernmentofIndiashouldconstituteaSteeringCommitteeundertheaegisof
theMinistryofFinancecomprisingtheFinancialServicesRegulatorsformutualfundsandcapital
markets,pension,insurance,bankingandotherverticalsalongwithrepresentationfromCBDT.The
Committee’sobjectiveshouldbedefinedasachievingharmonisationinpoliciesandproceduresacross
multipleregulatoryframeworksintheFinancialServicesSector.
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Page32
7. Summary
Thereisaperceivedneedtoreviewriskandperformanceanalysiscapabilitiesand
governancestructures,tomeetfiduciaryresponsibilitiesandtheincreasingdemandfor
transparency.
AMCsthereforeneedtore-orienttheirbusinesstowardsfulfillingcustomerneeds.As
customersseektrustedadvisors,themanufacturer-distributor-customerrelationshipis
expectedtobecenterednotonthesaleofproducts,butforcollectivelypromotingthe
financialsuccessofcustomersacrossallfacetsoftheirprofessionalandpersonallives.This
requirescreatingacollaborativenetworkofexpertsinfundsmanagementandfinancial
advice,innovativeproductofferings,efficientservicedeliveryandsupportingtechnology.The
mutualfundindustrytodayneedstodevelopproductstofulfillcustomerneedsandhelp
customersunderstandhowitsproductscatertotheirneeds.
Giventhattheindustryneedstocollectivelyworktowardsridingoverthedynamicand
relativelylessfavourableeconomicenvironmentatpresent,thenextphasefortheindustryis
likelytobecharacterisedbyastrongerfocusoncustomercentricity.Otherareasoffocusare
likelytobecostmanagementandenablingstronggovernanceandregulatoryframework-all
aimedathelpingtheindustryachievesustained,profitablegrowth,goingforward.
©2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwiss
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List of Abbreviations
AMC AssetManagementCompany
AMFI AssociationofMutualFundsinIndia
AML AntiMoneyLaundering
AUM AssetsUnderManagement
bps BasisPoints
CAGR CompoundedAnnualGrowthRate
CBDT CentralBoardofDirectTaxes
CFT CombatingFinancingofTerrorism
CII ConfederationofIndianIndustry
CSO CentralStatisticalOrganisation
ETF ExchangeTradedFund
FY FinancialYear
GDP GrossDomesticProduct
HNI HighNetworthIndividual
HRD HumanResourceDevelopment
ICI InvestmentCompanyInstitute
IFA IndependentFinancialAdvisor
IIMS InvestIndiaMarketSolutions
INR IndianRupee
ISC InvestorServiceCenter
KYC KnowYourCustomer
MF MutualFund
NAV NetAssetValue
NFO NewFundOffer
NGO Non-GovernmentalOrganisation
NISM NationalInstituteofSecuritiesMarkets
NPS NewPensionScheme
PMLA PreventionofMoneyLaundering
PSU PublicSectorUndertaking
PAN PermanentAccountNumber
PBT ProfitBeforeTax
R&T Registrar&TransferAgent
RBI ReserveBankofIndia
REMF RealEstateMutualFund
SEBI Securities&ExchangeBoardofIndia
SIP SystematicInvestmentPlan
SMS ShortMessagingService
UK UnitedKingdom
ULIP UnitLinkedInsurancePlan
USA UnitedStatesofAmerica
UTI UnitTrustofIndia
©2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwiss
cooperative.Allrightsreserved.
KPMG in India
KPMGInternationalisaglobalnetworkofprofessionalservicesfirms
withover135,000peopleworkingtogethertodelivervalueinmorethan
140countries.KPMGinIndiadrawsonourfirms'deepindustry
experiencetoprovideAudit,Tax&Advisoryservices.Theindependent
memberfirmsoftheKPMGnetworkareaffiliatedwithKPMG
International,aSwisscooperative.EachKPMGfirmisalegallydistinct
andseparateentityanddescribesitselfassuch.
TheIndianmemberfirmsaffiliatedwithKPMGInternationalwere
establishedinSeptember1993.Asmembersofacohesivebusinessunit
theyrespondtoaclientserviceenvironmentbyleveragingtheresources
ofaglobalnetworkoffirms,providingdetailedknowledgeoflocallaws,
regulations,marketsandcompetition.Weprovideservicestoover5,000
internationalandnationalclients,inIndia.KPMGhasofficesinIndiain
Mumbai,Delhi,Bangalore,Chennai,Hyderabad,KolkataandPune.The
firmsinIndiahaveaccesstomorethan3000Indianandexpatriate
professionals,manyofwhomareinternationallytrained.Westriveto
providerapid,performance-based,industry-focusedandtechnology-
enabledservices,whichreflectasharedknowledgeofglobalandlocal
industriesandourexperienceoftheIndianbusinessenvironment.
©2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwiss
cooperative.Allrightsreserved.
Confederation of Indian Industry (CII)
TheConfederationofIndianIndustry(CII)workstocreateandsustainan
environmentconducivetothegrowthofindustryinIndia,partnering
industryandgovernmentalikethroughadvisoryandconsultative
processes.
CIIisanon-government,not-for-profit,industryledandindustrymanaged
organisation,playingaproactiveroleinIndia’sdevelopmentprocess.
Foundedover114yearsago,itisIndia’spremierbusinessassociation,
withadirectmembershipofover7800organisationsfromtheprivateas
wellaspublicsectors,includingSMEsandMNCs,andanindirect
membershipofover90,000companiesfromaround385nationaland
regionalsectoralassociations.
CIIcatalyseschangebyworkingcloselywithgovernmentonpolicy
issues,enhancingefficiency,competitivenessandexpandingbusiness
opportunitiesforindustrythrougharangeofspecialisedservicesand
globallinkages.Italsoprovidesaplatformforsectoralconsensusbuilding
andnetworking.Majoremphasisislaidonprojectingapositiveimageof
business,assistingindustrytoidentifyandexecutecorporatecitizenship
programmes.Partnershipswithover120NGOsacrossthecountrycarry
forwardourinitiativesinintegratedandinclusivedevelopment,which
includehealth,education,livelihood,diversitymanagement,skill
developmentandwater,tonameafew.
Complementingthisvision,CII’sthemefor2009-10is‘India@75:
Economy,InfrastructureandGovernance.’Withintheoverarchingagenda
tofacilitateIndia’stransformationintoaneconomicallyvital,
technologicallyinnovative,sociallyandethicallyvibrantgloballeaderby
year2022,CII’sfocusthisyearisonrevivaloftheEconomy,fasttracking
InfrastructureandimprovedGovernance.
With64officesinIndia,9overseasinAustralia,Austria,China,France,
Germany,Japan,Singapore,UK,andUSA,andinstitutionalpartnerships
with213counterpartorganisationsin88countries,CIIservesasa
referencepointforIndianindustryandtheinternationalbusiness
community.
©2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwiss
cooperative.Allrightsreserved.
Acknowledgements
We express our sincere gratitude to Mr U K Sinha, Chairman – CII National Committee on Mutual Funds and Chairman & Managing
Director, UTI Asset Management Company Limited for his guidance in preparation of this report.
We are also grateful to Mr A P Kurian, Chairman, AMFI for sharing his perspective and supporting us with data as required.
We would sincerely like to acknowledge and thank the following industry leaders for providing their valuable views for this report (in
alphabetical order):
• Mr Achal Kumar Gupta, Managing Director, SBI Funds Management Private Limited
• Ms Ashu Suyash, Managing Director and Country Head, Fidelity Fund Management
• Mr Harshendu Bindal, President, Franklin Templeton Asset Management (India) Private Limited
• Mr John Mathews, Senior Vice President and Head - Client Servicing, HDFC Asset Management Company Limited
• Mr Navin Suri, Chief Executive Officer, ING Investment Management (India) Private Limited
• Mr Nilesh Shah, Deputy Managing Director, ICICI Prudential Asset Management Company Limited
• Mr Nitin Jain, Director – Personal Financial Services, Religare Finvest Limited
• Mr N P Ghanekar, Managing Director and Chief Executive Officer, JM Financial Asset Management Private Limited
• Mr Paul Armstrong, Advisor, ING Investment Management (India) Private Limited
• Mr Rajiv Deep Bajaj, Vice Chairman & Managing Director, Bajaj Capital Limited
• Mr R S Srinivas Jain, Senior Vice President, Chief Marketing Officer, SBI Funds Management Private Limited
• Mr Sandesh Kirkire, Chief Executive Officer, Kotak Mahindra Asset Management Company Limited
• Mr Sanjay Parikh, Chief Operations Officer, Taurus Asset Management Company Limited
• Mr Sanjiv Shah, Executive Director, Benchmark Asset Management Company Private Limited
• Mr Sundeep Sikka, Chief Executive Officer, Reliance Capital Asset Management Limited
• Mr Suresh Babu V, Senior Vice President and Head - Operations, HDFC Asset Management Company Limited
• Mr Ved Prakash Chaturvedi, Managing Director, Tata Asset Management Limited
• Mr Vikramaaditya, Chief Executive Officer, HSBC Asset Management (India) Private Limited
• Mr Vivek Kudva, Managing Director - India & CEEMEA, Franklin Templeton Investments
• Mr Vipul Jhaveri, Chief Operating Officer, JM Financial Asset Management Private Limited
We also thank other stakeholders in the industry who have supported us with their perspectives and all the respondents of the “Voice of
Customer” survey conducted by KPMG.
This report has been written by P S Deepa and Vikas Arora with support from the KPMG team comprising Divya Arora, Kunal Jain, Tasneem
Lakdawalla, Kunal Pande, Vinit Mehta, Shruti Rustagi, Aashutosh Chaudhari, Vikash Madhogaria, Sundar Ramaswamy, Vishnu Pillai, Vinay
Garodiya, Sowmya Anantharaman, Sneha Rohekar, Pranav Desai and Nisha Fernandes.
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cooperative.Allrightsreserved.
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