SEBI has recently incentivized AMCs to make mutual funds more popular in locations beyond the top 15 cities.
AMCs
are taking various steps to expand their presence beyond the top 15 cities. Most
of the AMCs are tying up with PSU as well as private banks for reaching out to investors
in these cities. While some are opening more branches, a few other AMCs plan to
concentrate the 2 basis points spend for development of the market through investor
education and awareness initiatives in these cities.
For instance, Reliance Capital Asset Management has already outlined its expansion plan
beyond top 15 cities. It plans to double its current branch
network of 200 and add 5,000 new distributors to its current strength of
40,000. Most of the new branches have been planned to be opened in tier 3 and tier 4
cities. “First-time
investors feel more comfortable when a fund house is physically present in
their town to meet their servicing needs. By pushing through the recent
regulatory changes, SEBI has done what it can to encourage retail investments.
Now, it is up to the industry to make products more accessible to investors”,
said Sundip Sikka, President and CEO, Reliance Asset Management Company.
The
regulator has been continuously nudged fund houses to expand their reach. UK Sinha, chairman
SEBI, reportedly said at a recent event, "The industry has to go
beyond top 15 cities and if you do so, then you will get good and sustained business.”
HDFC Mutual Fund is planning to convert 15 out of 60 resident
representatives located beyond top 15 cities into proper branches. The AMC has
120 branches across the country out of which 75 branches are located beyond the
top 15 cities, besides 60 residential representatives in tier 2 and tier 3
cities. It is also planning more strategic tie-ups with private banks and later
PSU banks. The AMC wants to educate investors by tying-up with IFAs with
experience in conducting investor education program in these cities.
UTI Mutual Fund too is planning to add 100 new points of sale in these ‘non-top 15’ locations. Currently it is present in 532 districts. The AMC wants to stress more on training the employees recruited in these branches rather than expansion.
