The Association of Mutual Funds in India (Amfi) is considering a common platform for mutual funds (MFs), which would enable investors, distributors and registrar and transfer agents (RTAs) to access and transact in products of all fund houses.
“We are working on a concept which will bring investors, RTAs and distributors on the same platform,” said Amfi Chairman A P Kurien, on the sidelines of a FICCI conference here today.
An Amfi committee is working on finalising the system, he said, declining to divulge details.
In yet another initiative, Nimesh Shah, CEO of ICICI Prudential Mutual Fund, said that asset management companies (AMCs) would have to come together to penetrate Tier III and Tier IV towns. He said that while a large number of applications came from smaller towns, mutual funds have not been able to create a branch presence in such places.
Therefore, he said, there was a need to create cooperation among fund houses, wherein a local distributor would set up the network and appoint agents, who would sell the products in towns and other rural pockets. The cost of agents would have to be met by all mutual fund houses as it would sell products of all AMCs.
Shah further said that the presence of some large private banks in these towns has been a huge advantage for mutual funds. A large portion of the systematic investment plans come from these small locations.
The penetration of mutual funds is quite low in India, with fund houses getting only 3-4 per cent of domestic savings. Though the domestic savings rate is quite high at 35 per cent, a major part of the money is channelled to insurance products and fixed deposits.
In a bid to make mutual fund investments cheap for retail investors, the Securities and Exchange Board of India had scrapped entry load charges on direct mutual fund applications last year. Recently, it proposed a variable load structure for mutual funds wherein investors will determine the commission to be paid to distributors.
