MUMBAI - Mutual funds should look at increasing their assets under management (AUM) from retail investors given the huge redemption pressures faced by some funds last year, the market watchdog chief said Wednesday.

“Higher percentage of AUM must come from retail. Last year was a tough year for mutual fund industry and redemption pressure came mainly from corporates,” said Securities and Exchange Board chairman C.B. Bhave at a mutual fund seminar here.

The Reserve Bank of India had opened special borrowing windows for mutual funds last fiscal as a majority of them faced redemption pressures from corporate customers.

“I am not saying that corporates should be driven away,” added Bhave.

Comparing stability of the retail investor vis-a-vis corporates, he said: “The Sensex came down from 21,000 to 9,000 levels but there was no redemption pressure scare from the retail side.”

Maintaining that though the mutual fund industry had passed unscathed in the recent global crisis, he added: “There were certain issues, particularly in the way liquid schemes of mutual funds were structured, which need to be tackled.”