Indian Mutual Funds industry begins a big new push with four states as testing grounds

The Association of Mutual Funds in India (AMFI) is embarking on a major initiative to expand the country’s mutual fund distribution network, in collaboration with India Post. As reported by The Times of India on August 20, the plan involves training around one lakh postmen to act as mutual fund distributors, effectively turning each district in selected states into a hub for financial inclusion. Initially, the programme will focus on Bihar, Andhra Pradesh, Odisha, and Meghalaya, targeting the addition of 20,000 new distributors within the first year. By the end of the year, the objective is to ensure every district has at least 10 trained distributors, with a longer-term aim of raising this number to 20 per district. The initiative also includes partnerships with academic institutions to implement a train-the-trainers model, boosting local capacity and strengthening the overall distribution network. Additionally, the collaboration addresses Know Your Customer (KYC) compliance for individuals without Aadhaar numbers, further facilitating wider participation.
Currently, approximately 45% of mutual fund investments originate from smaller towns. In comparison, the top 30 cities contribute 65%, highlighting significant untapped potential in rural and semi-urban areas. Despite an annual inflow of 30,000 new distributors, net additions remain around 10,000, underscoring the need for more robust distribution efforts. The mutual fund sector has grown rapidly in recent years, with folios rising from 2.1 crore in 2019 to 5.6 crore today, and AMFI aims to double this figure in the coming years. With 80 crore bank accounts across India and assets under management currently representing 21% of GDP, compared with over 100% in developed markets, the initiative could accelerate financial inclusion and participation in the mutual fund ecosystem, making the sector a key driver of domestic savings and investment.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.