BFSI Summit: 'Digital drive, retail surge to power MFs' next leg of growth'

At BS BFSI Summit, industry leaders said that rising investor participation, digital adoption, and continued faith in SIPs will propel MFs into next phase of growth

Even after growing at a blistering pace over the past decade, India’s mutual fund (MF) industry believes it still has a long runaway for long-term expansion.

 

At the Business Standard BFSI Insight Summit 2025, industry leaders said that rising investor participation, digital adoption, and continued faith in systematic investment plans (SIPs) will propel MFs into the next phase of growth — one marked by deeper retail penetration and greater investor sophistication.

 

“We have been growing at a rapid pace of around 24 per cent,” said D P Singh, deputy managing director and joint chief executive officer (CEO), SBI Mutual Fund, during a panel discussion moderated by Samie Modak of Business Standard.

 

 

“Even if we grow by 20 per cent going ahead, the industry will double in four years. So, putting a target of ₹100 trillion assets under management (AUM) is anybody’s guess — it will happen sooner than later,” Singh said.

 

Navneet Munot, managing director (MD) and CEO of HDFC Mutual Fund, said India’s MF journey has been built on strong foundations but needs to go further in building investor confidence.

 

“We take pride in being one of the most transparent industries in the world,” he said, adding: “The growth so far has come on the back of four Ts — track record, transparency, technology and training. Now we must build the fifth T, which is trust.”

 

While the industry’s assets are less than one-fifth of India’s gross domestic product (GDP), compared with over 80 per cent in the US, Munot said that only underlines the scope ahead. “Every time we have projected a number for the industry, it has done better. The long-term story remains intact,” he said.

 

The MF industry has had a strong run in recent years, with SIP accounts growing more than three-fold in five years from about 30 million in 2020 to nearly 97 million now. Yet the average monthly contribution has inched up only modestly.

 

“The average SIP size has moved from ₹2,300 in 2021 to about ₹3,200. If that goes up to even ₹5,000 over the next few years, it can make a huge difference to overall wealth creation,” Singh said.

 

B Gopkumar, MD&CEO of Axis MF, said that even with such growth, India’s investor base remains small.

 

“We have only around 56 million unique investors. The headroom for expansion is huge. Digital is the new Bharat — onboarding and KYC (know your customer) are much simpler, and fintech platforms are bringing in a new set of first-time investors,” he said.

 

However, Gopkumar cautioned that fintechs will need to focus more on investor education. “Many of them are great at customer acquisition but not at building stickiness. We need to ensure that SIPs last longer and investors stay invested through market cycles,” he said.

 

For Vetri Subramaniam, CEO-designate of UTI Asset Management Company, the next phase of growth will come from broadening the base and improving investor discipline. “We have to reach more people with smaller ticket sizes and ensure they stay invested long enough to benefit from compounding,” he said.

 

Subramaniam said the industry must also focus on the underdeveloped debt fund space. “The equity side has grown rapidly, but the debt market remains underrepresented. That’s a large untapped opportunity,” he said.

 

Investor behaviour, the panel agreed, has improved significantly. “Any fall in the market is now seen as an opportunity. Retail investors have shown remarkable maturity, and the industry has become more resilient,” Singh said.

 

Munot said the steady rise in SIP flows despite volatility is a sign of that change. “Our SIP book has grown from ₹4,000 crore in 2017 to about ₹29,000 crore now, across several market phases. It shows how resilient Indian investors have become,” he said.

 

The next leg of expansion can also come from product innovation, panellists said.

 

According to Gopkumar, the recently introduced specialised investment fund (SIF) gives AMCs a chance to create more flexible and customised offerings. “SIFs will be a large category and can attract investors who want personalised solutions,” he said.

 

Singh, whose firm was among the first to launch an SIF, said early trends are encouraging. “About 30 per cent of investors in our SIF are new to mutual funds. Many came through digital channels, which shows how innovation can expand reach,” he said.

 

For new entrants such as Sid Swaminathan, MD&CEO of Jio BlackRock AMC, the data itself makes the opportunity obvious.

 

“We have entered this space because the potential is immense. In the last five years, assets have tripled and investors have almost tripled. Even if growth slows and we just double from here, the scale will be huge,” he said.

 

Swaminathan said the digital ecosystem will play a central role in that journey. “About 10 per cent of our 750,000 investors are completely new to mutual funds, and nearly 40 per cent of our flows come from beyond the top 30 cities. Artificial intelligence (AI) and regional-language content will make it easier to educate and engage investors everywhere,” Swaminathan said.

 

He also expects passive investing to gain further traction. “It is not active or passive — it’s active and passive. India’s passive fund share is about 18 per cent compared with over 50 per cent in the US, so there’s plenty of room to grow,” Swaminathan said.

 

Munot added that both approaches will co-exist. “We want to be a one-stop wealth-creation platform. Whether investors prefer active or passive, the focus is on meeting their financial goals,” he said.

 

Despite their different perspectives, the five executives agreed on what will drive the industry from here — inclusion, investor education, and transparency.

 

“The more open we are about what we charge and how we perform, the more trust we build. That trust will define the next phase of growth for mutual funds in India,” Gopkumar said.