Liquidity in the banking system has had an impact on the interest rates of bank deposits. Interest rates on term deposits of almost all banks have come down drastically. Interest rates on FDs of most banks have been limited to five percent.
Whether public banks or private banks, only four to five percent interest is being received on FD. In such a situation, the trend of investors has increased rapidly in mutual funds. This is the reason that in the poor economic conditions due to the Corona epidemic last year, 72 lakh new folios were added to the mutual fund industry.
68 lakh folios joined the mutual fund industry in 2019
According to the data of the Association of Mutual Funds Association (AMFI), in 2019, 68 lakh folios were associated with the mutual fund industry but in 2020 their number increased to 72 lakh folios.
Actually, during the Corona transition people started keeping their savings in banks safe. Due to economic uncertainty, people started cutting expenses and paid attention to savings. This has increased liquidity with banks and reduced interest on term deposits. With this, depositors turned to mutual funds for higher returns on their funds.
Mutual funds got power due to the Sensex surge
Recently the Sensex touched the figure of 50 thousand. This also increased the interest of investors in equity mutual funds. This is the reason why the trend of investors is increasing in mutual funds and folios are increasing.
If this trend in the stock market continues, despite the economic uncertainty, mutual fund folios may see further increase. According to AMFI data, by the end of December 2020, the total number of folios of 45 mutual fund companies increased by 72 lakhs to Rs 9.43 crore.
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