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Bank of India to start mutual fund business in December 2011

 

GOVERNMENT-run lender Bank of India (BoI) has decided to advance its proposed re-entry into the mutual fund business by a few months to December.

"We are working on it (mutual fund business). By December, I suppose, we should have something in place," Bank of India chairman and managing director Alok Misra said.

He refused to give more details on the business model saying the bank is working out the details. He also refused to say whether it will be a joint venture or not.

Earlier this year, the bank had said it would launch its mutual fund business by early 2012 and was scouting for a partner.

It was also reportedly in talks with Bharti Axa Investment Managers and Pramerica AMC, which were planning to sell their stakes.

Bank of India was in the mutual fund business in 1990. Of the six schemes launched by the fund, four had been redeemed and two schemes transferred to Tauras Mutual Fund after giving exit option to investors in 2004.

Banks generally enter the mutual fund space as they can leverage their branches for distribution, which in turn would help cut cost of delivery, thus, improving business efficiency.

At present, there are eight mutual funds either fully or partly owned by banks, along with overseas partners. These include Baroda Pioneer Mutual Fund, Canara Robeco Mutual Fund, ICICI Prudential MF, Principal MF of PNB and SBI Mutual Fund, Axis MF, IDBI Mutual Fund and Union KBC MF of Union Bank. There are 40 mutual fund players in the country with average asset under management of over Rs 7,00,000 crore.
 

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