Why India Post’s reach isn’t enough to sell MFs

Some ideas look compelling on paper, but execution is a challenging task.

- Srushti Vaidya

A similar challenge is likely to surface in the Association of Mutual Funds in India’s (Amfi) plan to train one lakh postmen to sell mutual funds (MFs).

The appeal is obvious. Who doesn't want to tap into India Post’s vast network— one that has nearly seven times the number of branches (1,60,000) as the State Bank of India (SBI), the mutual fund distributor which reaches the most people in the country? It is early days, and though Amfi is trying to make this work, it’s an uphill task, say experts.

The challenge is training the postmen to sell riskier products. Till now, postmen have focused on selling capital guarantee products like the National Savings Scheme and the Monthly Income Scheme.

“Postmen enjoy widespread trust, reliability, and recognizability among common people. Yet, MFs represent a dynamic, complex domain where products are intangible and require clear explanations and calculations,” said Debasish Mohanty, chief strategy officer at The Wealth Company Mutual Fund.

Even post-NISM certification, their grasp of financial markets may be limited, mirroring gaps among many rural clients unfamiliar with market dynamics, Mohanty said.