Capital market: Mutual funds could beat banks in credit; Kotak AMC Nilesh Shah explains what investors should do

Credit provided by India’s capital markets could eventually surpass bank lending, Kotak Mahindra AMC managing director and CEO Nilesh Shah said on Tuesday, underscoring a structural shift in how the economy is financed.Speaking at an event in Mumbai, Shah said credit, which was traditionally dominated by banks, is increasingly being provided by capital markets and mutual funds. “Credit traditionally was provided by banks. But now it is provided by capital markets… And one day, I’m sure it will exceed bank credit,” he said, PTI quoted him as saying.Shah, who is also a part-time member of the Economic Advisory Council to the Prime Minister, noted that capital markets are generating employment at a scale comparable to banking when both direct and indirect jobs are factored in.Calling for a shift in financial behaviour, he urged Indians to invest more wisely, saying income alone was not the issue. “Today, India is poor not because it is earning less, but because it doesn’t invest well,” Shah said at the event organised by brokerage Groww and consulting firm Bain & Company.He cautioned against unproductive uses of savings, such as holding idle cash at home, losses from crypto bets or spending on now-banned real money gaming. Shah also flagged concerns around financial literacy, saying even mutual fund industry employees were found to have invested in a Ponzi scheme that collapsed recently.Speaking at the same event, Edelweiss Mutual Fund MD and CEO Radhika Gupta called for structural incentives to encourage investing at an early age. She suggested lock-ins of five to ten years to help investors stay disciplined and build long-term wealth.