You are the hero, and SEBI is like the cops who show up in the climactic climax of a Bollywood film: A. Narayan G

 You are the hero, and SEBI is like the cops who show up in the climactic climax of a Bollywood film: A. Narayan G

Sincere comments were made by the regulator's full-time member in a speech to the mutual fund sector at Moneycontrol's MF Summit.

Ananth Narayan from SEBI said that investor education is one area where all industry stakeholders have a role to play at Moneycontrol's MF Summit.

Ananth Narayan G, a full-time member of SEBI, spoke at Moneycontrol's Mutual Fund Summit in Mumbai on October 11 and congratulated the mutual fund (MF) industry on its achievements, which included a phenomenal increase in assets under management (AUM) and the number of unique investors. At the same time, he emphasized that the sector still had a long way to go and faced several challenges and possibilities.

explosive growth

Narayan supported his claim with various statistics, pointing as that the industry's AUM increased from Rs 22 lakh crore in March 2020 to Rs 48 lakh crore by September 2023. The total number of investors has increased from 2.2 billion to 4 billion within the same time frame. Additionally, he praised the MF sector for acting as "a fantastic ambassador for the securities market" by promoting financial inclusion inside the ecology of the securities market. According to him, this was shown by the increase in the number of unique demat accounts, which went from 4.2 million in March 2020 to 8.9 million by September 2023.

But he issued a warning that there are also some depressing realities that should be remembered.

Speaking in terms of financial inclusion, he said that there is still a long way to go when it comes to enrollment considering that there are only 4 crore unique MF investors and there are 51 crore accounts countrywide where PAN and Aadhaar have been connected. Similar to bank deposits, which now total Rs 200 lakh crore, retail MF assets currently total Rs 26 lakh crore. This demonstrates the potential for expansion and increasing the reach of MFs beyond of the T-30, or top 30 areas, to B-30 locations.

While praising mutual fund distributors (MFDs) for their crucial function within the ecosystem, Narayan said that since MFDs get commissions on products, the incentives are by necessity not focused on providing customers with the optimum asset allocation. "Pls make sure that this ecosystem continues to have strong checks and balances so that no perverse incentives build up," he remarked in response to MFDs. Tell someone if you observe anything since we need to keep the investor's confidence. You are the hero in SEBI, much like the policeman who appears last in a Bollywood film.

savvy investors

Then, highlighting a significant potential, Narayan said that every industry participant has a responsibility to play in the area of investor education. He said, "While the concept of returns has been explained very well, the concept of risk in terms of what the investor feels in his or her bones has to be communicated to the investor."

Speaking of "finfluencers," or online financial influencers, Narayan stated that SEBI is troubled by them because they are tampering with confidence. "We are doomed if we lose the confidence of the typical investor. To prevent rip-offs, we must make sure that there is investor education and transparency.

Don't rest on your laurels, he advised the MF business as he concluded his speech. There are enormous potential and enormous risks, and MFs are essential to capital development.