1 min read.Updated: 21 Jul 2021, 09:13 PM ISTNeil Borate
The bank saw its income from gross mutual fund commissions grow from Rs374 crore in FY 2019-20 to Rs488 crore in FY 2020-21
The State Bank of India (SBI) has emerged as one of India’s fastest growing mutual fund distributors in FY 2020-21. The bank saw its income from gross mutual fund commissions grow from ₹374 crore in FY 2019-20 to ₹488 crore in FY 2020-21, according to mutual fund commission data put out by industry body AMFI. SBI overtook Axis Bank to become India’s second largest mutual fund distributor in FY 2020-21. Axis Bank saw a dip in its commission income from ₹416 crore to ₹393 crore and moved to third place in the distributor rankings. NJ Indiainvest retained the top spot with distribution commissions of ₹874 crore, up 12.4% over the past year.
AMFI reports the commission income of distributors who have mutual fund distribution income exceeding ₹1 crore or distributors who have such income exceeding ₹50 lakh from a single fund house or those who operate in more than 20 locations. Overall the commissions reported by AMFI grew by 7.6% over the past year to hit ₹6,617 crore. Typically mutual fund distributors earn around 1% commission on the value of their clients’ equity schemes and 0.5% on debt schemes. The sluggish growth in commissions stood in contrast to the huge rally in India’s equity market and hence mutual fund assets over the past year. Mutual Fund Assets under Management (AUM) in India grew from ₹24.7 lakh crore at the end of March 2020 to ₹32.17 lakh crore in March 2021, a jump of 30% as equity markets rallied. The sluggish growth also comes on the back of a large drop in commissions in FY 20 when a Sebi rule abolished upfront commissions. A large number of fintech platforms have popularised direct investing which bypasses mutual fund distributors and this is likely to have contributed to the slow growth.
AMFI data shows a fall in commissions for several large corporate mutual fund distributors. IIFL Wealth and Finance Ltd saw its commission income fall by 12%. Anand Rathi Wealth Ltd which has filed papers for an Initial Public Offering (IPO) also saw its gross mutual fund distribution commissions drop by 14% according to AMFI data from ₹115 crores to ₹98 crores.