Mutual funds grow faster than bank FDs in 5 years

A report released by AMFI and CRISIL reveals that mutual funds have grown faster than bank FDs in 5 years.

The report says that the AUM of the Indian mutual fund industry has grown to Rs. 53.40 lakh crore in March 2024 from Rs. 23.80 lakh crore in March 2019, clocking a CAGR of 17.5%.

On the other hand, the AUM of bank deposits has grown to Rs. 212.53 lakh crore in March 2024 from Rs. 126.39 lakh crore in March 2019, a CAGR of 11.0%.

The report attributes this shift to low interest rates on fixed deposits. Here are the major trends that the mutual fund industry witnessed in the last five years:

• The share of bank and non-bank deposits in the net household savings declined to 46% in March 2023 compared to 48.5% in March 2021
• On the other hand, the shares of mutual funds have increased to 8.4% from 7.6% in two years
• The proportion of currency in the net household savings has also decreased to 11.10% In March 2023 from 11.4% in March 2021
• The share of life insurance has also witnessed an increase of 0.7% over the same period of time
• The share of life insurance in the net household savings in India has reached 21.5% in March 2023 compared to 20.8% in March 2021
• The mutual fund AUM to GDP ratio has also picked up in the last five years and reached an all-time high of 18.2% in March 2024. which was at 12.6% in March 2019
• The MF AUM to GDP ratio is lower than the global average of 74%, which indicates the under-penetration of the mutual funds in the Indian economy
• Almost all the major economies including the USA, Canada, Brazil, the UK, Japan, Korea and China have a better average than India
• The USA, Canada and Brazil are the top three countries in terms of MNF AUM to GDP ratio with the ratio of 131.7%, 90.5% and 77.5%, respectively

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