Indian MF industry begins a big new push with four states as testing grounds
Association of Mutual Funds of India
(
Amfi
) is on a mission to broaden its investor base significantly. In collaboration with
India Post
, the organisation is aiming to train around one lakh postmen to serve as mutual fund distributors, The Times of India reported on August 20.
This initiative is part of a broader strategy to ensure that every district in selected states has at least ten distributors by the end of the year, ToI's report (by Sidhartha) said.
Amfi's chief executive, Venkat Nageswar Chalasani, told ToI that four states -- Bihar, Andhra Pradesh, Odisha and Meghalaya -- will be the testing grounds for this major new initiative. The plan is to train college students in these regions, targeting the addition of 20,000 new distributors within the first year.
By the year's end, the goal is to ensure that every district has a minimum of ten trained distributors, with an aim to increase this to twenty by the following year.
In addition to training, Amfi is working on partnerships with leading academic institutions to create a "train the trainers" programme. This move will enhance the capacity of local distributors and improve the overall distribution network.
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The collaboration with the department of posts also addresses long-standing issues related to KYC (Know Your Customer) compliance for individuals lacking Aadhaar numbers.
The initiative aims to revamp India Post's operations, transforming each of its verticals into profit centres. If successful, postmen will take on roles similar to relationship managers in banks, promoting savings products and expanding the reach of mutual fund investments.
Currently, approximately 45% of mutual fund investments originate from the bottom 30 towns, while the remaining 65% comes from the top 30 cities. This highlights a significant opportunity for growth in smaller towns and rural areas. Despite an annual influx of about 30,000 new distributors into the mutual fund industry, net additions remain around the 10,000 mark, emphasising the need for increased distribution efforts.
The mutual fund sector has experienced remarkable growth in recent years, with the number of folios rising from 2.1 crore in 2019 to 5.6 crore today. Chalasani expressed optimism about doubling this figure in the coming years.
He told the newspaper that the campaign has raised considerable awareness about mutual funds, indicating a vast potential market, particularly given the existence of 80 crore bank accounts in India.
Currently, assets under management in India's mutual fund sector represent about 21% of the country's GDP. In contrast, developed nations often see this figure exceed 100%, with the global average sitting at around 65%. The potential for growth in India's mutual fund market is substantial.
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