Small investors in mutual funds may soon be relieved of the cumbersome process of providing their PAN or permanent account number every time they make a deposit. The government has given in principle approval to this proposal.

The exemption will only apply to an annual investment of up to Rs50,000 in MF units.

Moreover, only investments through monthly systematic investment plans (SIPs) will be exempt from the provision.

Announcing this on the sidelines of a CII conference in New Delhi, Association of Mutual Funds in India (AMFI) chairman A P Kurian said, ''We are waiting for the official notification from the government but the proposal has been approved.''

In 2007, market regulator Securities and Exchange Board of India had made it compulsory for all resident and non-resident Indians to submit a copy of their PAN cards while investing in securities.

The AMFI has been lobbying against the move for quite some time, specially in the face of dwindling MF investments. ''It is a good thing - it will let the industry grow. There is a strong need to harmonise statutory and regulatory norms for the mutual fund industry,'' Kurian said.

The industry is expected to record 150 million folios by 2015 from 48 million, Kurian said. It industry added 10 million folios a year between 2005 and 2008, but the number declined to a mere 3 million in 2008-09, he added.

Growth projected at 15-25 per cent
Meanwhile, the CII-KPMG report on the Indian mutual fund industry, which was released at the summit, states that investment in mutual funds comprised 7.7 per cent of the gross household financial savings in fiscal 2008, a significant increase from 1.2 per cent in fiscal 2004. The report mentions that households held 55 per cent of their savings in bank fixed deposits, 18 per cent in insurance and 10 per cent in currency in fiscal 2008.

The industry is likely to continue to grow 15-25 per cent over the next five years based on the pace of economic growth, the KPMG report stated. In the event of a relatively slower economic revival, the industry may grow 15-18 per cent over the next five years, it said.

''Industry profitability may reduce further as revenues of asset management companies shrink due to focus on low-margin products to attract risk-averse investors, and also as operating costs escalate due to the focus on penetrating retail population beyond tier-2 cities and operating costs escalate,'' said the report.

Panellists at the summit stressed on the need for creating and selling simple products. ''We need to sell products which can be explained to an investor in about five to six lines,'' said Milind Barve, Managing Director, HDFC AMC.

''There are more than 900 schemes, so simplification would help,'' agreed Dhirendra Kumar, chief executive of Value Research.