What's stopping AMCs, insurers from entering remote markets like Kargil?
NEW DELHI : India had 162 million demat accounts as of June, and 93 million SIP (systematic investment plan) accounts as of July—a strong indicator of increasing financialization in the country. Still, there are places where terms like “Sensex" or “Nifty" are foreign to people. Kargil, in the Union territory of Ladakh, over 200 kilometres from Srinagar, is one such place.
Neither an asset management company (AMC) nor an insurer has yet set up a branch here. The vacuum is filled by an agent of Life Insurance Corp. of India, who has earned himself the “LIC Mansoor" moniker.
“I have been selling insurance policies in Kargil for over two decades. But lately, there has been a mistrust in financial products since the ‘paisa double’ scam surfaced in which a company fled after taking people's money a couple of years ago," said Mansoor Ahmed, aka LIC Mansoor. As far as banking activities are concerned, most people prefer fixed deposits (FDs) with Jammu and Kashmir Bank, which has multiple branches in Kargil.
The city has a couple of branches each of State Bank of India (SBI) and Punjab National Bank. Private lenders HDFC Bank, Axis Bank and ICICI Bank are also present. "Some mutual fund (MF) business happens via bank branches.
I have seen people investing in new fund offers of SBI Mutual Fund via SBI, but the awareness is low," said Mohammed Amin, accounts manager and tax consultant at B.R. Sobti & Co. Chartered Accountants.
J&K Bank, however, does not focus on MF distribution. "Some private banks and SBI do pitch MF investments, but there are hardly any takers. People tend to run fixed and recurring deposits with us.
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