Nimesh Shah on Investor Base | OLM Interaction
Nimesh shah, MD & CEO, ICICI Prudential Mutual Fund talks about the importance of financial awareness.
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00:00 My favorite one, first thing I think we have done a very good job. I don't take that we
00:15 have not done a good job in terms of getting number of customers in because if you see
00:18 the direct equity, mutual funds is now a common name. I will just give an example. When my
00:24 yoga instructor says that yoga is a SIP, it's a systematic investment plan that you are
00:29 doing. So if SIP has come at such a level where a yoga instructor is telling me that
00:34 this is an SIP, that means it has become a common name. So investor awareness is much
00:38 better today than what it was earlier. The product is very pure. I think SEBI has regulated
00:43 this product brilliantly where it has become a very pure product for the final customer.
00:47 There are two challenges in this product. I feel if we take care of them, it can really
00:51 spread. One is the number of distributors in this business is very low. Somebody needs
00:59 to work out that if somebody has to become a retail distributor, is it a viable business?
01:05 Mutual fund is not a pull product. Nobody gets up in the morning, very few people get
01:09 up in the morning to say that where I am going to invest today. Very minority, majority of
01:15 the people have to be explained financial planning because they have never learnt in
01:18 school or college or even in their jobs. So they have to be explained financial planning
01:23 and they have to be explained that they have to invest and it's a push product. It's not
01:27 a pull product. So once we agree that it is a push product, are there number of distributors
01:34 who make a living out of selling mutual funds? How many are there? I think that count is
01:38 very very very limited. In a country like India, if you want 10 crore people to be,
01:42 you never ask that question. Media always ask me that how many number of investors.
01:47 You ask me about number of investors. To create 10 crores, if you want to create 10 crores
01:51 people who have got mutual funds or 5 crore people who have got mutual funds, how many
01:55 agents we have in the country who are doing a business of mutual funds? First we need
02:00 to see that. So I think the number of agents, number of distributors is pathetically low.
02:06 We need to increase that because this is always going to be a push product and it's not going
02:10 to become a pull product really easily. Second thing is we have got various regulators. We
02:18 have got Reserve Bank of India, we have got who regulates banks. We have got ADA which
02:23 regulates insurance companies. We have got SEBI which regulates us. Somewhere they have
02:27 to come together and have to, we have talked about it a lot, but we have to implement common
02:32 KYC. See I have got lakhs of people who come on my site. Out of that how many I am able
02:38 to convert into customer? It is less than 2% who get converted into customer. Imagine
02:43 Flipkart. If you go to Flipkart and if you are asked some questions on your KYC and all
02:47 that you have to do, how many will you be able to convert into customers? Right? Similarly
02:52 in mutual fund if you ask so many questions on KYC, why can't we have a system whereby
02:57 if he has got a bank account, he will be able to open an account. Right? That's what we
03:02 need to simplify. There has to be a common KYC. Already we know whom he is banking with.
03:07 If we need the details we can always trace him with his bank account. Why do you need
03:10 to do a separate KYC? So the regulators have to come together and come up with a common
03:15 KYC where it serves us as an industry mutual fund if we want more people to become, we
03:21 want if all people who are banking in this country have to become mutual fund owners
03:25 then we should accept a bank KYC.
03:27 [Music]