The biggest risk in the financial services business today is the Regulatory risk. The more the regulators think that they can prevent frauds and cheating the more they will move into the controls of a business.
Sebi has been making a lot of changes in the mutual fund business – there is a good chance that the size of the industry will shrink. Same thing about RBI and IRDA.
Just hold on! Is the industry shrinking in size? No. Not at all.
Some re-arranging will happen. If you have been wondering why there were 44 players in the mutual fund industry, but only 4 were profitable, well now there will be more.
Fidelity is planning to sell its stake (according to ET, but then ET has said this many times in the past, and frankly I have no clue whether they will or whether they are planning to).
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