Securities and Exchange Board of India (SEBI) Whole Time Member G Mahalingam today cautioned the mutual fund industry that global regulatory trends could impact the future growth of the asset management companies.
Observing that in the present positive scenario, there was a need to factor in aspects which could impact future growth, he added that reduced liquidity could impact inflows into mutual funds.
"The US Fed tightening cycle may come in March or April next year and the impact of that on Indian markets would be very significant," he said at the CII Mutual Fund Summit, as per the release issued by the industry body.
The Indian asset management industry is pegged at USD 300 billion, clipping at a rate of 25 per cent between FY12 and FY17.
Pointing out the inter-connect between mutual funds, banking, insurance and pension funds, he said that any reduction in liquidity would obviously have an impact.
The aspect of fees vis-a-vis commission was an issue which needed to be considered for future growth potential, Mahalingam said, while adding that consumer protection was an important issue.
UTI Asset Management Company Chairman Leo Puri said while it was a good position for the Indian asset management industry to be in, and an apt time to take stock of the scenario and prepare for further growth, it was also prudent for the industry to prepare for future challenges.
Puri said key challenges to the growth of this sector included low consumer awareness and trust, limited distribution network restricted to top few centres and lack of innovation in products.
"This is where aspects like ensuring sustainability, ensuring growth of distribution channels, introducing different products for a changing paradigm of investors, implication of digital platforms and analytics across the retail business value chain are among the issues that the asset management industry needs to factor in while preparing for the future," he said.
He added that despite the challenges, the sector is expected to register continued growth momentum.
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