Mutual and other Funds

109. How do bank rates relate to Mutual Funds? Explain.

Ans: It can be the primary or the only options for the investors , if the bank rates remain same or go down futher and floating rates are introduced on bank deposits paving the way for volatility in bank returns . If the RBI adopts floating rate interests on bank deposits , the investor will not have any reservation for bank deposits , as he cannot differentiate between the bank deposit and MF in terms of volatility in returns , which enables the MF Industry to grow rapidly and continue to attract new investors.