The fund house is looking to gather Rs. 1000 crore in 2014 from these new branches, many of which will serve remote locations like Leh and Port Blair.
In a major expansion drive, SBI Mutual Fund today unveiled 51 new branches in beyond 15 cities in 23 cities in the presence of SEBI Chairman U K Sinha. With these additional branches, SBI Mutual Fund’s total branch network increases to 161 spread across 27 states.
Dinesh Khara, Managing Director & CEO, SBI Mutual Fund told Cafemutual that the fund house is looking to collect Rs. 1000 crore from these new branches this year. He said that he is expecting these branches to break-even in a year.
Leh Branch, SBI Mutual Fund
The fund house has shortlisted the locations based on the quantum of bank deposits of the local population.
Leh, Asansol, Bhilwara, Jorhat, Port Blair are some of the locations where SBI is setting up new branches. Besides leveraging its bank branch network, the fund house will tap the existing distribution force and enrol new cadre of distributors to reach out to investors.
To begin with, the fund house will sell simple schemes like liquid, FMPs and capital protection funds to its investors in these towns to make them familiar with mutual funds.
Speaking at the event, U K Sinha urged other fund houses to follow suit. He expressed his displeasure towards the industry’s slow progress in opening branches in B-15 locations. “Of the 1505 branches, 946 are located in B-15 cities. From September 2012 till December 2013 the industry has added opened only 55 branches,” he pointed out.
The regulator has allowed AMCs to charge a higher total expense ratio (TER) on the assets gathered from small towns based on certain conditions. Industry players cite high costs and tough market conditions as some of the reasons for not opening branches in B-15 locations.
Fund houses reach service investors mainly through the R&T offices if they don’t have branches in those locations. To keep costs under control, some fund houses are appointing Business Development Associates to expand their presence in small towns.
SBI
MF which manages Rs. 65,101 crore as on December 2013 has 18% assets under
management coming from B-15 cities.
New branches opened by SBI
