Investor Issues
Seven banks among top-ten commission earners for mutual funds

HSBC, HDFC Bank, Citibank, StanChart, Axis Bank, ICICI Bank and Kotak Mahindra Bank are among the top ten commission earners for selling mutual funds during FY12

 
New Delhi: Banks seem to be taking away all the cream when it comes to earning commissions from sale of mutual funds, as there are as many as seven banks among the top-ten mutual fund distributors in terms of commissions paid to them, reports PTI.
 
As per the latest disclosure of commission and expenses paid by various fund houses to their distributors, HSBC, HDFC Bank and Citibank top the chart for the last fiscal ended 31 March 2012.
 
Besides, there are four other banks among the top-ten commission earners -- Standard Chartered Bank, Axis Bank, ICICI Bank and Kotak Mahindra Bank.
 
According to the distribution commission disclosure made by the industry body Association of Mutual Funds in India (AMFI), there were seven banks among the top-ten distributors on this parameter in the previous fiscal 2010-11 as well.
 
Besides, all these seven banks recorded an increase in the payments paid to them by the fund houses for distribution of mutual fund products, even as the industry had been raising concerns till recently about their businesses being hurt by the regulations regarding lack of sufficient incentives for sale of mutual fund products.
 
There has been only one change among these seven banks with ICICI Bank replacing public sector giant SBI in the top-ten. SBI is the only major bank to have witnessed a decline in the mutual fund distribution payments made to it during the last fiscal, pushing it out of the top ten.
 
AMFI has listed out a total of 269 mutual fund distributors, who were collectively paid about Rs1,860 crore during 2011-12 towards commission and expenses towards sale of MF products. These distributors recorded an increase of about Rs163 crore in such payments from Rs1,697 crore in the previous fiscal 2010-11.
 
The list for 2011-12 only includes those distributors who are operating from more than 20 locations. 
 
As per AMFI data, a total of 403 distributors were paid a total commission of Rs1,773 crore in the fiscal 2010-11, but many of them have not been named in the list for 2011-12.
 
The seven banks, which are part of the top-ten, were together paid Rs662 crore, accounting for more than one-third of the commission paid to all the distributors during 2011-12.
 
Besides these seven, other banks which figured high on the list for 2011-12 included Deutsche Bank, Royal Bank of Scotland, State Bank of India, BNP Paribas, ING Vysya Bank, Indusind Bank, IDBI Bank, DBS Bank, Canara Bank, Union Bank of India, Barclays Bank, Yes Bank, Bank of India, Punjab National Bank, Bank Of Baroda, State Bank of Patiala and Development Credit Bank.
 
About 25 banks were collectively paid about Rs870 crore, accounting for nearly half of the total commission payments made by the fund houses during 2011-12 to all the distributors put together.
 
The non-bank distributors that figured among the top-ten in the last fiscal included NJ IndiaInvest, JM Financial and ICICI Securities Ltd.
 
Other such major distributors were DSP Merrill Lynch, Bajaj Capital, SPA Capital, Aditya Birla Money Mart, Karvy Stock Broking, Prudent Corporate Advisory Services, IIFL Wealth Management, Anand Rathi Financial Services, ENAM Securities, Pioneer Client Associates, RR Investors Capital Services, Wealth Advisors (India), Bluechip Corporate Investment Centre, Barclays Securities (India) and Credit Suisse Securities India.
 
Among the top-ten, only JM Financial saw its payments decline during 2011-12, while Citibank, HSBC, ICICI Bank, Axis Bank and HDFC Bank topped the list in terms of increase in their payments.
 
In the previous fiscal 2010-11, the highest commission was paid to HSBC, followed by HDFC Bank, NJ IndiaInvest, Citibank, Standard Chartered Bank, JM Financial Services, Kotak Mahindra Bank, Axis Bank, Bajaj Capital and SBI in the top ten.
 
The seven banks, which figured among the top ten in 2010-11, accounted for about 29% of total commission in that year, which rose to nearly 35% in 2011-12.
 
In the year 2010-11, a total of about 30 banks were paid a total amount of about Rs 690 crore, accounting for close to 34% of cumulative commission paid by the fund houses that year, indicating a significant rise in the share of banks in the mutual fund commissions in the last fiscal.
 

User

COMMENTS

Vikas Gupta

4 years ago

About Indusind Bank, After discussing with lot of AMC Officials & with my personal experience, I have concluded that The bank is not following Ethical practices as a Banker as well as Mutual Fund Broker. The Bank calls its customers whose Clearing Cheques present in their Bank as Clearing house of MF Investments & force them to stop them & invest through them & if somebody sends the application by courier to some other place & the cheques is cleared through non Home branch, then after sometime, these customers are forced to redeem their investments through any other intermediatory & invest through the Bank only. I have complained the Bank CEO Directly as well as through moneylife but no response at all. So all Financial Advisors are requested to be cautious of their investors having their Bank Accounts in IndusInd Bank Branches. Firstly, I was thinking that it is happenning in Rohtak(Haryana State) Branch only but after discussion with lot of AMC Officials, I have come to know that this is the general practices of IndusInd Bank nationwide. They are working against the RBI as well as SEBI/AMFI rules openely & nobody dares to punish these malpractices.

Central Bank to launch combo loans, cut deposit rates soon

Central Bank of India will be launching a combo loan offer -- which means offering a car loan without the processing fee to a customer who has availed of a home loan within the fortnight

 
Aamby Valley (Pune): Public sector lender Central Bank of India has said it will bring down its deposit rates further soon, to enable it to lower its lending rates, and will launch a combo loan offer within a fortnight, reports PTI.
 
"We are looking at cutting our base rate going forward. But to do that we have to first lower our deposit rates. Accordingly, as liquidity is comfortable, we will soon cut the pricing of our liabilities shortly, which will be followed by a base rate cut," chairman and managing director MV Tanksale told PTI.
 
Speaking after inaugurating 40th national convention of the Institute of Company Secretaries of India over the weekend, Tanksale said the Mumbai-based lender will also be launching a combo loan offer -- which means offering a car loan without the processing fee to a customer who has availed of a home loan within the fortnight.
 
On the rationale behind it, the chairman said, "Normally a home buyer looks for a new car too. So it makes sense for us to fund his car as we already know him/her. Also, credit growth has been a trickle so far this year. We need to ramp up our lending to meet the fiscal target."
 
Several other public sector lenders like State Bank, Uco Bank, Corporation Bank, Union Bank, United Bank, etc, have already come out with combo loan offers ahead of festive season.
 
The second quarter of the fiscal saw credit uptick almost flat at 0.1% at 16.4%. The Reserve Bank's guidance for credit is 17-18%.
 
Credit growth stood at 16.4%, against the central banks projection of 17% for the year during the fortnight ending 14th September, accroding to the RBI data.
 

User

Banks should provide easy credit to artisans: Sharma

Citing the success story of Varghese Kurien, who ushered in 'white revolution', the Textile minister wondered why the same cooperative model cannot be adopted for the handicrafts sector to empower people in the country

 
Chennai: Textile Minister Anand Sharma has strongly batted for banks providing easy credit to artisans, craftsmen and weavers, like the way loans were disbursed to big industries, saying they have to find the "right balance", reports PTI.
 
"..What percentage of lending by the banks (to artisans)? Miniscule. The same question is not put when billions are lent to big industries," Sharma said after inaugurating the World Crafts Summit.
 
Banks have to play an important role to enable artisans and craftsmen get easy and adequate credit, he said, adding "Sometimes, they may default. If easy access to credit is there, market linkages are there, we will be able to help them".
 
"..I have to ensure that industry also gets easy access to credit before there are howls of protests," he said, adding that there has to be "right balance" by banks.
 
Elaborating on the steps taken by the government, he said the National Institute of Design (NID), which has done lot of work to support artisans, will soon be declared an 'an Institution of Excellence.' 
 
Efforts are also on to establish four more NIDs in the country, the Minister said.
 
The government is also seriously thinking to create an academy for handicrafts on the pattern of national academies.
 
Citing the success story of Varghese Kurien, who ushered in 'white revolution', Sharma wondered why the same cooperative model cannot be adopted for the handicrafts sector to empower people in the country.
 
Highlighting the response that the products of craftsmen from the country received abroad, Sharma said, "But our poor artisans, they cannot access those markets. So, we have taken a number of decisions here. Because a big major decision gets trapped or someone makes some noise, which is part of political discourse and part of politics." 
 
Referring to FDI in retail sector, Sharma said,"..Our policies, our decisions have a distinct Indian imprint...a minimum of 30% of the sourcing has to be from MSMes, cottage and village industries. I was surprised when I was informed that already huge amount of sourcing is being done from India."
 

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)