The term BIMARU states, which originally referred to Bihar, Madhya Pradesh, Rajasthan, and Uttar Pradesh as economically backward regions, is now seeing a transformation in terms of the mutual fund industry’s asset under management (AUM) growth. These states have witnessed a remarkable surge in mutual fund investments, challenging the traditional notion of their economic health.
In the past year, the AUM of mutual funds in these states has outpaced the industry average growth, signaling a positive trend in smaller towns and cities. For instance, Uttar Pradesh has surpassed Tamil Nadu to secure the sixth position in overall AUM ranking with ₹3.19 lakh crore. Similarly, Madhya Pradesh, Bihar, and Rajasthan have also experienced substantial growth in mutual fund AUM, reflecting a broader trend of financial inclusion and investment diversification.
Experts attribute this growth to several factors, including the industry’s focus on expanding beyond major metropolitan areas and the popularity of Systematic Investment Plans (SIPs) among investors in smaller cities. The suspension of SEBI’s special incentives for mutual funds in smaller cities last year has not deterred the industry’s efforts to tap into these emerging markets.
The increasing presence of top corporates, high net-worth individuals, and a growing number of individual distributors in B-30 cities (beyond top-30 cities) have contributed to the rise of mutual fund investments in these regions. With over 50% of live SIP accounts coming from semi-urban and rural areas, the financial industry’s outreach efforts have been fruitful in fostering a culture of investment across the country.
The proliferation of online distribution channels has further facilitated access to mutual funds for investors in remote areas, driving the growth of SIP accounts in smaller cities. As equity markets continue to deliver strong returns, investors in small towns are becoming increasingly interested in mutual fund investments, indicating a shift towards a more inclusive and diverse investment landscape.
Overall, the surge in mutual fund AUM in BIMARU states underscores the changing economic dynamics and investment landscape in India. The industry’s commitment to reaching untapped markets and the growing interest of investors in smaller cities are reshaping the financial ecosystem, offering new opportunities for wealth creation and financial empowerment across the country.
