SEBI’s B15 initiative may take some more time to yield results.
The latest SEBI survey, titled SEBI Investor Survey (SIS) 2015, found that less than 1% of rural people invest in financial instruments. Of 13,697 respondents, only 35 have some kind of financial investments, a mere 0.23%.
Of these 35 rural investors, 21 (66%) invest in mutual funds, 4 (12.5%) in equities and 7 (22%) invest in bonds and debentures; none has ever invested in derivatives or futures.
Yet 95% of the rural respondents have bank accounts, 47% have life insurance, 29% have post office deposits and 11% save in precious metals, the study reveals. Although the SIS data highlights a high propensity to save, these potential investors do not participate in the securities markets – possibly, due to a lack of awareness.
Almost all respondents are aware of bank deposits. Similarly, 88% and 76% are aware of life insurance and post office savings, respectively. The awareness levels for mutual funds and equities are 1.4% although less than 0.5% are cognisant of futures, derivatives or debentures.
On mapping out the data, SIS finds that rural investors tend to reside close to the local district headquarters or urban centres like Delhi, Bengaluru and Hyderabad.
When asked about how advisors can tap into rural investors, Jayakant Dand, financial advisor in Malkapur, in Maharashtra’s Buldhani district, says, “The best way to reach out to these pockets is by approaching some of the influential people of the village, the sarpanch or a medical practitioner or someone who is well respected. First, convince this person why investing in mutual funds could be beneficial and later expand your client base through them. Once, other people hear of how you helped increase the wealth of your clients, they will approach you too.”
Jayakant Dand has more than 4,500 clients who are mostly from villages around Malkapur. He also conducts various welfare programmes in villages to increase his credibility among rural investors.
Bhilai-based Zian Khan, of Omega Financial, who caters to rural investors, believes in reaching out to rural people through his colleagues. Zian says, “I have been approaching prospective investors in rural areas through our staff members and friends. We make them aware of benefits of investing in mutual funds. In my view, rural people are very cautious and you would require spending time to gain their trust. Once you prove yourself they tend to be extremely loyal.”
