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Monday, May 10, 2004

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`Opportunities to grow on retail front are immense'

Nilanjan Dey

Mr S.V. Prasad, CEO, Birla Sun Life Mutual Fund

Kolkata , May 9

THE individual investor will assume even greater significance for mutual funds, feels Mr S.V. Prasad. The new CEO of Birla Sun Life MF should know, trying as he is to communicate more with the retail segment, beginning with the salaried class.

"There is a strong case for salaried individuals to straightaway park a part of their regular earnings in funds. Even liquid funds can be a superior option when compared to savings bank accounts. Systematic investments in select equity and debt funds can be made as well," he said. Excerpts:

Is retail growing in the right manner, especially in the way that the MF sector desires?

The opportunities to grow on the retail front are immense. The asset management industry is just about beginning to make a difference to the individual investor's habits. There will be more on our hands as options become narrower.

Bank deposits are still a very popular means of saving in this country and fund houses have to work hard at tapping the resources lying in banks. Some specific initiatives may be reserved for employed individuals who are in a position to make regular, or even monthly, contributions.

In certain other markets, salaries, or perhaps a part of it, go directly into funds that have been selected in advance. A part of this system can be replicated here as well.

Funds also urge individuals to throw in small but regular payments, a process that leads to rupee-cost averaging.

It should be remembered that pension funds will soon begin to operate in India. These funds will need a system of deduction from salaries.

What can MFs offer in particular?

Let me just talk in reference to Birla MF and some of the concepts that it has tried to encourage.

Take the case of our liquid fund, which investors can use for holding money on a purely temporary basis and for moving it later for more productive purposes.

Here, we have introduced a special plan for bulge-bracket investors, ones that can put in at least Rs 20 crore initially. For such customers, expenses have been kept low for the time being.

Ready-to-use cheques, issued to investors as a special facility, have been introduced; these will make the redemption process easier for them.

I am focusing on innovations, aimed at catering to additional sections of the market.

Elsewhere, our existing MIP has added two variants, each with a different equity ceiling. A few other players have also done this lately with the hope of giving a wider choice to investors.

Is Birla MF able to penetrate deep enough?

Generally speaking, we have been trying to convey the right messages.

It may not be proper to suggest that we will reach a certain level in terms of AUM (assets under management) within a pre-defined time period.

Performance and the class of service offered will be far more important indicators. Let me add here that we are lately trying to convey our ideas in clear, cogent terms.

Our ads are turning simpler and have definitely become low on clutter.

The market, I feel, would appreciate it. We have added a good number of customers to our existing base, which now stands at over five lakhs.

Also, a CRM exercise that has been started recently should further boost our internal efficiency.

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