Nine players in various stages of launch as stock markets show signs of revival.
With the capital market showing signs of revival, banks and financial companies that had put their mutual fund plans on hold are gearing up to enter the segment.
At present, nine players from the financial services sector are in various stages of entering the space. The list includes Bank of India, IDBI Bank, Axis Bank, Mahindra and Mahindra Financial Services (M&M Finance), SREI Infrastructure Finance, Bajaj Allianz, Indiabulls Fiancial Services, L&T Finance and Motilal Oswal.
While Axis Bank and Indiabulls are ready for product launches, companies like Srei have received the regulatory go-ahead. Bank of India and IDBI Bank are in the process of setting up asset management companies and are scouting for partners.
Though the market is crowded with 36 players, some of whom are looking to exit, the newcomers say there is a lot of potential. Besides, a mutual fund subsidiary will help these companies cross-sell. They would also be able to use their existing networks, said bankers.
“We have to provide all financial services. We have a large customer base and we can cross-sell products,” said Bank of India Executive Director BA Prabhakar. BoI would soon appoint a consultant to finalise a foreign partner.
The AMC set up by Axis Bank, the country’s third-largest private sector lender, is expected to enter the mutual fund space early next month.
“The proportion of mutual fund investment to household savings is 4-5 per cent in India while the share of bank fixed deposits is around 20 per cent. In addition, over the last 10 years, while a number of new players have come in, we have also seen a number of players exit. This will continue,” said Rajiv Anand, who heads Axis Asset Management Company.
A banker said players that did not have a large retail participation would depend on corporate links for debt schemes.
Another lender, IDBI Bank, recently received the Reserve Bank of India’s approval for starting a mutual fund business. It has now approached the market regulator, the Securities and Exchange Board of India (Sebi), for approval. IDBI Chairman and Managing Director Yogesh Agarwal expects to launch the business by the end of the current financial year.
Among non-banking finance companies, SREI Infrastructure has received Sebi’s approval to enter the asset management business. Mahindra & Mahindra Finance has sought regulatory nod for an AMC.
“We have appointed a consultant to look into the worthwhileness of the mutual fund business. The consultant's report is expected in three months. We have also applied to Sebi for its in-principal approval,” said M&M Finance Chief Financial Officer V Ravi.
