Today, the Reserve Bank of India (RBI) released the results of the 2023-24 survey on Foreign Liabilities and Assets of Mutual Fund (MF) Companies. The survey, which covered 45 Indian MF companies and their Asset Management Companies (AMCs), provides detailed insights into the foreign financial positions of these entities as of March 31, 2024.
Key Findings for Mutual Fund Companies:
Foreign Liabilities: The foreign liabilities of mutual fund companies surged by 36% to USD 25.4 billion by March 2024, largely due to units issued to non-residents. This increase reflects a substantial rise in the market value of these units, from USD 18.6 billion in March 2023 to USD 25.4 billion in March 2024.
Overseas Assets: The overseas assets of mutual fund companies also grew, reaching USD 8.8 billion, primarily driven by increased equity securities. This marks an increase from USD 6.7 billion in the previous year.
Net Foreign Liabilities: Consequently, the net foreign liabilities expanded to USD 16.6 billion from USD 12 billion a year ago.
Geographic Distribution: The United Arab Emirates (UAE), the United States (USA), the United Kingdom (UK), and Singapore were the leading destinations for MF units held by non-residents. The USA and Luxembourg were notable for their significant share in overseas equity investments by Indian MFs.
Key Findings for Asset Management Companies:
Foreign Liabilities: The foreign liabilities of AMCs increased by USD 3.4 billion to USD 6.4 billion by March 2024, driven by higher inward direct and portfolio investments.
Overseas Assets: In contrast, the overseas assets of AMCs were relatively low, amounting to USD 0.1 billion.
Foreign Direct Investment: Residents of Japan, Canada, and the UK contributed significantly to the foreign direct investment in Indian AMCs, with these countries accounting for 83% of the total FDI.
Overseas Direct Investment: For overseas direct investments by AMCs, countries such as Guernsey, Singapore, Mauritius, and the UAE were notable.
Conclusion:
The survey highlights a notable increase in both foreign liabilities and assets of Indian mutual fund companies, indicating a growing integration of Indian financial markets with global investors. The increase in net foreign liabilities and the substantial foreign holdings in equity securities underscore the expanding international footprint of Indian mutual funds. For AMCs, while foreign liabilities have risen sharply, their overseas assets remain relatively modest, reflecting a more cautious international investment strategy.
This detailed survey provides valuable insights for stakeholders, including investors, policymakers, and market analysts, by reflecting the growing global engagement of Indian financial entities.
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