So, what exactly is independence for you?
See, if you are asking about the political independence, it has a different meaning. But if you are asking about the financial independence, it is a different meaning. And I bow my head to all the architects of modern India starting from the revolutionaries like Bhagat Singh or revolutionaries like Subhash Chandra Bose to the creator of modern India, like Pandit Jawaharlal Nehru ji and our great leaders who have put in a lot of efforts in getting us political independence.Unless until we have political independence, we cannot have a financial independence and financial independence does not come like political independence overnight. It is a journey and journey started 76 years ago and it looks like that we have reached the space where it is going to be the next like when we reached a space where from growth is not only imminent but is going to be very, very, very, very fast.So that is something which gives me a lot of confidence. And the kind of self-confidence which I see in a normal Indian today, in a common man today, it speaks the story of India’s growth so that gives me confidence that after 66 years we are really-really financially independent.
The sustainability is no more an issue. Roti, kapda, makan does not look like to be that major issue. Though we know that they are bottom of the pyramid. India is such a big country. Still, there are poor, but we have to fight .
We are blessed to have such leadership, such ecosystem today and then it is growing so, so, so fast. So, now we have reached a level of not only political independence, but we have matured in the financial independence as well.
Totally. I think that is also evident with a lot of data if we just look back. Also, talking about the rise of Indian investor in this entire modern India story, how have you witnessed that? How have your AMC witnessed that?
No, I mean, let us see. We are 35 years old company now. We came into being in 87 and today when we look at it, the last six-seven years have been amazing, amazing for all of us. And what we could achieve in 2028, 29 years, much, much more than that we have achieved in the last six years.When six-seven years ago, the total industry was eight trillion rupees and today our AUM itself, SBI Mutual Fund AUM is more than 8,25,000 crores. So that itself tells the story.
This is the money of all millions of investors who are investing their money with us and the fund management team in our company is trying to generate as much alpha as possible, give them as much return as possible.
People look at the money and people look at the returns. But the revolution which has happened in India because of that good quality capital, for which ecosystem has been created by the government and the regulator, I think that we need to appreciate that ecosystem much more than anything else.
And also the success story of SIP, I think that has acted like a Brahmastra.
Yes, that is an amazing story, that is a global success story because nowhere in the globe, there is any country which is getting $2 billion per month, almost $2 billion per month, through an investment at an average of $40 or $50 per month by the small investors. Earlier, I remember in the initial career stage, we used to talk about the success story of 401k scheme of USA, where people are forcing money for their superannuation and all. I think the SIP story is as bigger or much bigger than that 401k story so that is something amazing and we feel so proud when on the international platform when some Japanese fund managers or when some Korean fund managers come and ask us how is SIP?
Please tell us something about SIP. How did you do that? And you have to explain it to them? And they say, yes, we tried, we failed. So that gives a lot of confidence that yes, we are doing something right here.
I think that it is the time now that the generation, Gen Z or even millennials, they are not concerned about savings. They are talking about making money. And, okay, be risky investment instruments, but then they want to try their hands everywhere.
Yes, because they have the risk appetite. Today the golden rules, which used to be talked about, if you are 30, you are this, and 100 minus age, you should be your equity because these are outdated things. An individual with a net worth of 10 crores at the age of 75 also is having much more appetite than a person of 30 years old who earns five lakh rupees a year and has a family of four to spare.
His risk capital is not there. So that age concept is no more valid. And second, the big thing is that most of the money is with the people who are in the senior citizen category or 50 plus. And their money, when this is not your sustainability money, when this is not for your roti kapda aur makan or your sustainability, then this is the money which is for the next generation. You have to pass it on.
So this money is, they are aware that this money is to be invested as per the risk appetite of that generation, not my generation. So accordingly, more and more money is coming into the risk capital that is equity capital. So that is a very, very healthy sign. And people have understood it. And I know even for this, we have to thank our regulator also.
I remember I was in mutual fund only when this concept of two basis points of investor education cess on the expense issue came. We were very disturbed. Why, why this is happening? This is irrational. But today, when I look back, I think this was the most rational things. And this is only because of the two basis points that Mutual Fund Sahi Hai campaign could come. And Mutual Fund Sahi Hai campaign of AMFI has made all the difference.
Let us look at India with the eyes of tier-1, tier-2 and urban cities. You think the financial literacy that we are looking at, especially post pandemic, is it just financial literacy that has grown or just the awareness of having a money-making instrument and maybe you have not tried it and you want to try it? What exactly has changed?
I will tell you one very, very frankly the pandemic was a blessing in disguise for the financial literacy because when people were sitting at home, what they were doing, either they were surfing Netflix, they were surfing TV channels or they were doing the investment studies and they were opening Demat accounts online and trying their luck on this thing.
And incidentally, except for the initial one or two months of the pandemic, the market started going up and everybody got hooked into this. But they did commit mistakes. They did lose money in some of the instruments. But with the mistakes, you learn a lot. And when somebody goes through a mistake, then the learnings are much more cemented in his mind.
So that has given birth to a very, very disciplined investor. Today, when the market goes up, today when the market is in a bullish mode, Indians are not putting additional money. They are either booking profits or they are sitting on the sidelines.
Earlier, it used to be different. When market was booming, everybody was coming in with lots of money to put in the market.
And they were, see when market was going down, they were withdrawing the money. So they were losing out. It has totally reversed. The moment there is a big correction in the market, we see a lot of inflows. And when the market is on the high, we see a lot of outflows. I think this is a complete behavioural change. This is a very mature kind of change which has happened and we are very happy about this.
Talking about Rise with India and talking about the modern India that was just discussed. According to you, what would be the important pillars that would just take the story ahead?
Important pillars for me, first thing first, if I really think this momentum of manufacturing, which is coming into India that will be a big, big event because that will create a lot of employment capabilities.
Our overall economic system will improve. I wish that our foreign exchange reserves goes above $1,000 billion very soon. And that brings in a lot of growth parameters into the country. We may be a step forward to the capital account convertibility only after $1,000 billion. So that will be one step which we are looking at. That will be one pillar. If we are able to make a difference, especially all the initiatives which our prime minister is taking on the new generation items, on the lithium, on other things which is happening all around us, on the microchips and all those things.
And if we are able to really, really create a difference, so that is going to be a big, big differential. Second pillar is, I think, the kind of discipline, which the financial discipline, which is coming into the minds of people. As you said, the investors are evolving. And during this period, a lot of new businesses are coming into the corporatized world.
They are getting into the listed space or they are getting themselves in the hands of professionals. That will be a big, big thing because when lots of money is looking at India, they also need something on the supply side; more IPOs, more this. And we have also learned from the success and failure of new age IPOs. So again, that those mistakes will not be repeated. So we are into this. We look at the total real business model of everything. The thing is improving.
So that more and more companies coming into the IPO mode that is something which will be a big differential. And third, the disciplined inflows into the equity market by domestic players because we should not allow that only foreign investors who are coming into it, they are coming for making money, right?
There should be proper system that they make money and they have a good experience so that keep on putting money. And at the same time, we have to encourage our domestic citizens also to continue to keep on putting some money in equity capital so that they also do not lose out on the opportunities which are looking at our faces. And action has to be taken by individuals by participating in that. Not by sitting on the sidelines. Nobody will become rich by sitting on the sidelines. Unless and until they put in money, maybe in a staggered way, that is something which happened. And I think this $2 billion SIP book will become $3 billion very soon. That will be another growth trajectory for the Indian capital markets.
