Canara Bank has decided not to hive off its subsidiary, CanBank Investment Management Services. The bank is, however, not averse to a partner for the asset management subsidiary.
R K Madhukar, managing director, CanBank Investment Management Services said, "The parent has decided against hiving off the subsidiary as the AMC has started making profits."
Almost a year and a half ago, the Reserve Bank of India issued a notice to public sector banks to re-look at their subsidiaries which were not doing well. At that time most mutual fund arms of public banks were struggling for survival as private players became aggressive fund mobilisers.
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Madhukar said the circular was interpreted as a directive from the central bank to quit all activities which did not come within the core operations of banks.
Canbank MF is now managing around Rs 700-odd crore of assets. The asset managers have set an internal target to achieve Rs 1,000 crore by the end of this fiscal but Madhukar said they easily hoped to achieve Rs 1,300 crore.
Last financial year, the fund saw net inflows of Rs 204 crore. "This year during the first three months, April to June, we saw a net accretion of Rs 45 crore," Madhukar said.
The fund as a whole has 3.2 lakh investors as of today. While at one point of time equity schemes were the fund's mainstay, today debt funds own a chunk of assets. Officials, however, said since the last two weeks there has been some pick-up in equity inflows.
The fund is planning to launch an open-ended pure debt scheme, a fixed maturity plan and an index scheme. Talks are also on for investing in derivative products but purely for hedging and managing risks.