Favourable tax environment will push more investors towards mutual funds says Munot

New Delhi: A more conducive regulation, specifically related to taxation of bond funds, is likely to increase investments in mutual funds and develop the bond market in India, said Navneet Munot, chairman, Association of Mutual Funds in India (AMFI).

“A more favourable outlook towards taxation on bond funds will ensure that a larger number of Indians can secure their retirement (through investment in these funds) and also develop the bond market in India,” said Munot at the sidelines of the MoU signing ceremony between AMFI and Asosiasi Manajer Investasi Indonesia (AMII).

The asset under management (AUM) of Indian mutual funds was $850 billion as of December 2024 and the Indian mutual fund industry aspires to reach a target of $3-4 trillion as key factors such as transparency drive growth in the mutual funds.


“The key factors that will drive the mutual fund growth in India are availability of record over 25-30 years for funds, transparency in the mutual fund market, technology and training and educating investors continuously,” said Munot.

Speaking at the MoU signing ceremony, Amitabh Kant, former CEO of Niti Aayog, said India has introduced structural reforms over the last decade, including digitisation that will result in exponential growth of the Indian capital markets.

“The level of digitisation which includes the digital public infrastructure that India has witnessed over the last ten years has helped stockbrokers to take the stock market to tier 2 and tier 3 cities,” said Kant.

Further, the recent proposal by the Securities and Exchange Board of India (Sebi) on sachetizaiton of mutual funds with small ticket investments starting at Rs 250 will lead to greater participation of investors in the capital market.

“The industry has been working under the guidelines of Sebi to leverage technological advancement to make small ticket investment cost-efficient and this also aligns with the prime minister’s goal of equitable growth through financial inclusion,” said Munot.

About what can be done to increase investments in green mutual funds, Munot said, “The world needs to work towards greening the finance rather than financing the green. We need to work together to ensure that growth is more sustainable.”