Around one lakh postmen set to turn MFDs. A game changer?

Picture this: the same postman who delivers your letters and money orders may soon be knocking on your door with another offering: mutual funds.

In a landmark partnership, India Post and the Association of Mutual Funds in India (AMFI) plan to train nearly one lakh postmen as Mutual Fund Distributors (MFDs). For an industry aiming to deepen its footprint beyond metros, this could be the push that takes mutual funds to ‘Bharat’.

What is the tie-up about?

AMFI has signed an agreement with India Post. The objective? To train postmen across the country to sell mutual funds. The rollout will start with four states: Bihar, Andhra Pradesh, Odisha and Meghalaya. By year-end, the target is to have at least 10 trained distributors per district, with the goal of doubling this number to 20 in 2026.

Why now?

• The number of mutual fund investor folios has leapt from 2.1 crore in 2019 to 5.6 crore. AMFI aims to double this number.
• Although the top 30 cities dominate mutual fund investments (65 per cent), the bottom 30 cities now account for 45 per cent of the share, highlighting the need to improve the reach of mutual fund investing in smaller cities and towns.
• While nearly 30,000 new distributors are added annually, net additions drop to 10,000, indicating a supply crunch.
• Despite the rise in investments, the asset base of mutual funds in India accounts for around 21 per cent of the GDP, which is well below the global average of 65 per cent and tiny compared to developed markets (over 100 per cent).

The bottom line

The tie-up between AMFI and India Post signals that the mutual fund industry is shifting gears, widening the funnel of participation. Over the next few years, the face of the Indian investor could look very different: fewer tier-1 cities, more small-town Bharat.