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20Th July 2016
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Mutual Funds (The Total Investment & Insurance
Solutions)
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In FY15-16, mutual fund distributors earned
as much as Rs3,648 crore in the form of commission and expenses. Of this, the
28 banks on the list earned a commission of Rs1,286 crore or nearly 35% of the
total commissions paid out. As we have often pointed out in the past, for
banks, a high concentration of in-house mutual fund sales is of their sponsored
asset management companies (AMCs). Based on the distributor commissions of
FY14-15, more than 1/3rd of the commission pay-outs to banks are sourced from
its in-house AMC. Not much has changed in FY15-16. The Total Investment & Insurance Solutions
Bank-sponsored mutual funds are hugely
dependent on their sponsor for inflows. Bankers command enormous reach and
trust among their customers compared to other distributors. For Axis MF nearly
21% of the gross inflows were from Axis Bank. Axis MF paid out Rs92 crore to
Axis Bank, nearly 56% of the total commissions paid to distributors. NJ
IndiaInvest, a national distributor, earned a commission of Rs20 crore or about
14% of the total commissions paid by Axis MF. The Total Investment & Insurance Solutions
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| Axis Mutual Funds (The Total Investment & Insurance Solutions) |
For ICICI Prudential MF, nearly 40% of the
gross inflows were through ICICI Bank. Therefore, not surprisingly, the banks
earn the highest commissions compared to other distributors on the list. For
ICICI Prudential MF, nearly 21% of the total commissions were paid to ICICI
Bank. Citibank was the next highest commission earner of ICICI Prudential MF
earning 5.80% of the total commissions. ICICI Securities earned nearly 4% of
the total commissions paid.
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| ICICI Prudential Mutual Funds (The Total Investment & Insurance Solutions) |
Similarly, in the case of HDFC MF, as much as
16% of the total commissions were paid to HDFC Bank. Second on the list was NJ
IndiaInvest earning about 9% of the total commissions paid by HDFC MF. SBI had
a share of 28% in the total commissions paid by SBI MF, while Kotak Mahindra MF
paid nearly 33% of the total commissions to Kotak Mahindra Bank and Kotak
Mahindra UK. While HSBC MF has not disclosed the distributor’s commissions for
FY15-16, in FY14-15, as much as 46% of the total commissions were paid to HSBC
Bank, Standard Chartered Bank followed behind earning a commission of 11%.
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| HDFC Mutual Funds (The Total Investment & Insurance Solutions) |
The top three banks on the list—HDFC Bank,
ICICI Bank and Kotak Mahindra Bank earned total commissions of Rs261 crore,
Rs170 crore and Rs166 crore in FY15-16. HDFC Bank, earned Rs91 crore (or 31% of
the total commissions) from HDFC MK. Nearly, 61% of the total commissions of
ICICI Bank were from ICICI Prudential MF. For Kotak Mahindra Bank, about 29% of
the commissions were sourced through Kotak Mahindra MF. Canara Bank, State Bank
of India and Union Bank of India earn over 90% of their commissions from their
in-house AMCs.
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| Total Commission (The Total Investment & Insurance Solutions) |
Clearly, for each bank, the best mutual
schemes are none other than the schemes belonging to their own group or the
ones that offers the maximum commission. The data showing that banks push hard
schemes belonging to the group which may or may not be in customer interest
proves our point once again. Unfortunately, savers don’t know this and tend to
trust their bankers blindly. After all, that is the place where they keep their
savings. The Total Investment &
Insurance Solutions
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