The reach ratio: Why India Post’s massive reach isn’t enough to sell mutual funds
Subscribe to enjoy similar stories. Some ideas look compelling on paper, but execution is a challenging task. A similar challenge is likely to surface in the Association of Mutual Funds in India’s (Amfi) plan to train one lakh postmen to sell mutual funds (MFs).
The appeal is obvious. Who doesn't want to tap into India Post’s vast network—one that has nearly seven times the number of branches (1.6 lakh) as the State Bank of India (SBI), the mutual fund distributor which reaches the most people in the country. It is early days, and even though Amfi is trying to make this work, it's an uphill task, say experts.
The main challenge is training the postmen to sell riskier products. Till now, postmen have focused on selling capital guarantee products like the National Savings Scheme and the Monthly Income Scheme, among others. “Postmen enjoy widespread trust, reliability, and recognizability among common people.
Yet, mutual funds represent a dynamic, complex domain where products are intangible and require clear explanations and calculations," said Debasish Mohanty, chief strategy officer at The Wealth Company Mutual Fund. “Even post-NISM certification, their grasp of financial markets may remain limited, mirroring gaps among many rural clients unfamiliar with market dynamics," Mohanty said. Every individual has to clear the National Institute of Securities Markets (NISM) series VA exam to become a mutual fund distributor.
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