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Mutual fund products are much less well known than insurance and banking.

Mutual fund products are much less well known than insurance and banking.

 Commission does not get more than 2.50 bps in mutual funds

 SEBI has imposed a fixed limit on distributors' commission


 Mumbai.  This is a tremendous setback for the country's mutual fund industry.  About 5,000 distributors, ie distributors, have not renewed their registration.  This information was given by the association of mutual funds Association of Mutual Funds in India (ANFI).  The number of distributors in this industry is already very low.

 8,600 distributors had done registration in 2019-20

 As per the data, a total of 8,600 distributors had registered for mutual fund distribution in FY 2019-20.  During this period, 5,100 distributors have not renewed their registration.  Similarly, in 2018-91, 8,600 distributors registered new.  While 17,600 distributors were newly registered in 2017-18.

 The number of distributors is decreasing due to lower commission

 According to analysts, mutual fund distributors are declining due to stock market volatility.  Also, compared to the distribution business of insurance and other financial products, the attraction of distributors in mutual funds has reduced considerably.  In recent times, SEBI has imposed a limit on the management expenses of mutual funds.  This has drastically reduced the commission paid to fund distributors.

 Industry will be worth 100 lakh crores by 2025

 The fall in the number of distributors will adversely affect the fund industry.  In September 2019, in a report prepared in collaboration with Boston Consulting Group, Anfi had stated that by 2025 the fund industry's asset under management (AUM) will increase from Rs 22 lakh crore to Rs 100 lakh crore.  But for this, 4 lakh new distributors have to be created.  However, 10 percent new distributors have not been added as compared to 4 lakh.  While every year the distributors are not even doing new registration.

 44 mutual fund companies are active

 Explain that a total of 44 mutual fund companies in the country have an AUM of Rs 25 lakh crore.  AUM means the money from investors, which is invested by mutual fund companies.  However, fund investors in both debt and equity have not experienced well recently.  Although the number of some fund distributors in the country is 80 thousand, but their number is not even 25 thousand actively.

 One reason for this is that commissions in mutual funds do not get more than 2.50 bps and also happen annually.  Whereas in sectors like insurance and banking, commission is up to 20 percent.  In this case, distributors go more into insurance and banking than mutual funds.

 B-15 city gets slightly higher commission

 Sebi has imposed a limit on the commission, fund distributors are not interested in selling this product.  Although B15 cities (ie, cities beyond the B-level 15 cities) have slightly higher commissions, the problem is that mutual funds are not as well-known as insurance and banking.  This is the reason why this industry is still not spreading properly.

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