TRENDS IN SAVINGS IN INDIA WITH SPECIAL REFERENCE TO GROWTH OF MUTUAL FUNDS
A quiet Revolution seems to be occurring in India’s retail space with a gradual change in the savings profile. Both savings and investment play an important role in the process of capital formation in a country. There are three sources of savings in India namely: household, private corporate and government. Of these from te Indian perspective household is the major source of savings.
A heartening feature has been the gradual transformation of household savings from physical savings to financial savings, with the effect being more pronounced after the demonetization move of the Indian Government in November 2016. Of late there has been a growing demand from households for mutual funds in India because of the high investment returns and less risk and cost. Mutual Funds can be considered as a form of investment which allows several investors to pool their resources in order to purchase stocks, bonds and other securities. There are different types of Mutual funds and their classification can be based on: asset class; structure and investment objective.
Mutual funds have both their merits and demerits. The merits include: professional management, diversification, greater choice, affordability, tax concession, liquidity, transparency and regulation by a mandatory authority. However, they are not without their demerits among which are: market risk, fluctuating returns, high cost, lock in period and difficulty experienced in selection. Mutual funds are gradually gaining popularity in India and in fact are one of the fastest growing and most competitive segments of the financial sector. The entry of private and foreign players in the market has created an element of competitiveness. In keeping with expanding investors’ support and favorable outlook of the current government, the future seems to be very bright. However, India has still a long way to go. The current urban outlook has to be changed and steps should be taken to reach the remotest corners of the country
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