RBI Study: Foreign Liabilities of Mutual Funds Up 19.9%
Why in the news
An RBI study showed rising overseas participation in Indian mutual fund schemes in FY25.
Key facts
- Foreign liabilities: ₹2.6 lakh crore in FY25 versus ₹2.1 lakh crore in FY24, a 19.9% rise.
- UAE is the largest source, roughly one-fifth of the total.
- US and UK together account for about 20%.
- Australia and Canada recorded the quickest growth, over 40%.
| Country | Observation |
|---|---|
| UAE | Largest, about 1/5 of the total |
| US and UK | About 20% combined |
| Australia and Canada | Fastest growth, over 40% in FY25 |
Positives and concerns
- Positive: more capital inflow into domestic funds and tighter links with global markets.
- Concern: greater exposure to global volatility and sudden outflows.
- Concern: possible threat to financial stability in external shocks.
- Concern: harder monitoring of cross-border flows.
Regulation
- FPI and non-resident investments are regulated by SEBI and RBI under the Foreign Exchange Management Act (FEMA), 1999.
Exam angle
- Growth rate: 19.9%; amount: ₹2.6 lakh crore.
- Top source: UAE.
- Governing law: FEMA, 1999.