Mumbai: Low deposit rates coupled with a raging bull market during the pandemic helped increase the share of mutual fund investments in the mix of bank deposits and MFs to a record 20% as of August 2023. In March 2020, mutual funds’ share stood at 13%.
Despite the safety and the guarantee of fixed deposits, investors don’t mind taking some risks with MFs, a report by Bank of Baroda said. This is because bank deposits were offering much lower returns compared to mutual funds till recently.
“During the pandemic, when interest rates were lowered significantly by RBI which caused deposits rates to come down, investors — both retail and corporates — put more funds in mutual fund schemes. This has led to a remarkable increase in the AUM (assets under management) of mutual funds,” the report said.
Taking 2019-20 as the base year, with rates being kept at an all-time low, there was a sharp increase in growth in AUM of mutual funds in the next three years. “There was a CAGR (compound annual growth rate) of 24.8% from Rs 20.3 lakh crore to Rs 39.4 lakh crore in this period for mutual funds. In the case of bank deposits, growth was just 10% from Rs 135.7 lakh crore in FY20 to Rs 180.4 lakh crore in FY23,” it said. Data from Amfi showed that from about Rs 8,600 crore monthly flows through the SIP route, the run rate in August 2023 was about Rs 15,800 crore.
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Despite the safety and the guarantee of fixed deposits, investors don’t mind taking some risks with MFs, a report by Bank of Baroda said. This is because bank deposits were offering much lower returns compared to mutual funds till recently.
“During the pandemic, when interest rates were lowered significantly by RBI which caused deposits rates to come down, investors — both retail and corporates — put more funds in mutual fund schemes. This has led to a remarkable increase in the AUM (assets under management) of mutual funds,” the report said.
Taking 2019-20 as the base year, with rates being kept at an all-time low, there was a sharp increase in growth in AUM of mutual funds in the next three years. “There was a CAGR (compound annual growth rate) of 24.8% from Rs 20.3 lakh crore to Rs 39.4 lakh crore in this period for mutual funds. In the case of bank deposits, growth was just 10% from Rs 135.7 lakh crore in FY20 to Rs 180.4 lakh crore in FY23,” it said. Data from Amfi showed that from about Rs 8,600 crore monthly flows through the SIP route, the run rate in August 2023 was about Rs 15,800 crore.
We also published the following articles recently
Low fixed deposit rates, pandemic rally spark interest in mutual funds
The share of mutual fund investments in the mix of bank deposits and mutual funds has reached a record 20% as of August 2023, up from 13% in March 2020. Despite the lower returns offered by bank deposits, investors have been willing to take on more risk with mutual funds. The decrease in deposit rates during the pandemic led to increased investments in mutual fund schemes, resulting in a significant increase in the assets under management (AUM) of mutual funds. In contrast, the growth in bank deposits was much lower.
The share of mutual fund investments in the mix of bank deposits and mutual funds has reached a record 20% as of August 2023, up from 13% in March 2020. Despite the lower returns offered by bank deposits, investors have been willing to take on more risk with mutual funds. The decrease in deposit rates during the pandemic led to increased investments in mutual fund schemes, resulting in a significant increase in the assets under management (AUM) of mutual funds. In contrast, the growth in bank deposits was much lower.
IOB raises foreign currency deposit interest rates
Indian Overseas Bank (IOB) has raised the interest rate on foreign currency deposits, offering 5.5% interest for US dollar denominated deposits under the FCNR and RFC schemes for a tenor of one to two years. The revised rates came into effect on September 15, 2023, as per the bank’s statement.
Indian Overseas Bank (IOB) has raised the interest rate on foreign currency deposits, offering 5.5% interest for US dollar denominated deposits under the FCNR and RFC schemes for a tenor of one to two years. The revised rates came into effect on September 15, 2023, as per the bank’s statement.
Audits in highrises held up as realtors yet to deposit funds
The structural audits of high rise residential societies in Gurgaon are being delayed due to developers failing to deposit funds for the execution of the plan. Additionally, developers have not shared building plans, which is necessary for carrying out the audits. The authorities have issued a final warning to developers, stating that action will be taken against those who do not cooperate. Furthermore, the progress of interior work evaluation and refunds for affected flat owners were discussed in a recent meeting.
The structural audits of high rise residential societies in Gurgaon are being delayed due to developers failing to deposit funds for the execution of the plan. Additionally, developers have not shared building plans, which is necessary for carrying out the audits. The authorities have issued a final warning to developers, stating that action will be taken against those who do not cooperate. Furthermore, the progress of interior work evaluation and refunds for affected flat owners were discussed in a recent meeting.
