The interdependence between corporates and mutual funds has raised concerns relating to volatility in financial markets.

Cautioning that the capital market is facing many challenges, the Economic Survey on Thursday said close links between corporates and mutual funds (MFs) have raised concerns about volatility in financial markets, reports PTI.

"The interdependence between corporates and mutual funds has recently raised concerns relating to volatility in financial markets," the Survey presented by finance minister Pranab Mukherjee in Parliament today said.

It also stated that there was limited participation from retail investors in the corporate debt market and in mutual funds.

Moreover, the recent global economic crisis had raised many issues about governance of financial intermediaries and awareness of investors, it added. Investor protection and education are both needed as neither would have the desired impact in isolation.

"A simultaneous and coordinated effort on both fronts would help investors take well-informed financial decisions besides protecting their interests and ensuring orderly conditions in markets," it added.

The Survey has, therefore, called for greater effort in promoting investor education and protection.