The greatest challenge, of course, is to get more retail participation in funds. We have made tremendous efforts in this direction. About 250 mutual fund outlets, including branches, franchisees and collection centres, were opened across the country in the last two years. Today, in metros and non-metros, there are more than 1,000 outlets to provide services to investors.

I do agree that 60 to 65 per cent of net assets still belong to institutional investors. But even the rest is no mean figure.

Mutual Funds are still not the most preferred investment vehicle in the country. How do you think this could change? In our country, people want to buy only sacred assets. Unless this mindset changes, it will be difficult to get investors interested in mutual funds. Government securities and post-office investments offer 8 per cent assured returns, while banks offer 6 per cent. So, competition is very high. Only sustained efforts by a trained and qualified distributor class can bring success.

Amfi has taken the initiative in training an army of distributors. Today, we have about 30,000 registered distributors. About 700 to 800 people are taking the test and getting registered every month. Around 100-odd investor awareness programmes are being conducted each month. From August to June this year, 1,600 programmes have been conducted across 600 locations by different fund companies. Thanks to foreign banks distributing funds, there is a band of new investors today. More than 50 banks are active distributors. A lot of churning has been happening because of new fund launches wherein distributors are paid substantially higher commissions. Aren't you concerned?

Churning is a very complex problem and we are very much concerned. The difficult part is that, churning happens with the knowledge and consent of investors as well. Yes, we have had a record number of fund launches this year. The market is galloping every day. So, a person who has invested in a fund at Rs 10, sees the NAV at Rs 20. He exits and then invests at Rs 10 again. This is wrong, when it is done regularly. We are discussing various ways to tackle the same and will take it up with Sebi. But there is no clear solution as of now.

Why don't you say there should be no additional incentives for new funds?
You must understand that this is also a business. So, we cannot micro-manage everything. There is a cap on expenses that funds can charge. Within the existing cap, there should be freedom and creativity for the managers to work.

Despite the plethora of new funds launched in the past year, there has been hardly any real innovation... There is a drought in the area of real innovations. Though funds are packaged differently, all of them invest in the same companies. But it is not a problem as long as the investor is not misled. As long as fund companies say what they are going to do and do not camouflage anything, it should be fine. The fact is that, people have a mindset to buy at Rs 10. The industry has to cater to that sentiment. Most mutual funds are launching funds focused on the flavour of the day or season. Don't you think this is dangerous?

People have a mindset to buy at Rs. 10. The industry has to cater to that sentiment

Can we have a uniform load structure to attract more retail investors?
There is always a discount for those who buy big. That is one of the basic laws of business. If you buy one shirt, you pay the full-price. If you buy two shirts, you get discount. If you buy three, you get one free. But I feel that an exit-load helps. It will discourage people from moving out easily.

Amfi has also been an industry lobby. Do you see it developing as one that is on the side of investors? Amfi was established for protecting and promoting the industry and investors. We have never done anything that damaged the interest of investors. Bearing the sole interest of customers in mind, we have inscribed certification, ensured quicker payment facilities and set up a committee for the simplification of the offer-document. There is a congruity of interest between the industry and the investor.

Have you invested in mutual funds personally? How has been your experience?
There have made gains and losses. However, I do not have any remorse. It is common that the preacher seldom follows what he teaches. Mutual fund investments are about 25 to 30 per cent of the total investments. And they are mostly on the equity side. I have recently shifted my debt-investments to the RBI and post-office investments.

Who is your favourite fund manager?

It's like asking me who is your favourite grandchild. I like all of them equally.