MUMBAI: Stae-owned ‘India Post’ has earned just about Rs 2 crore by selling mutual funds last fiscal. The national distributor with some 800 postal outlets selling mutual funds has logged its worst numbers in four years. The department has stopped selling mutual fund schemes of four out of five fund houses with which the department has exclusive distribution tie-ups.
According to senior officials, India Post is only selling mutual fund schemes of UTI Mutual Fund; the department has severed ties with Principal MF, SBI, Franklin Templeton and Reliance Mutual Fund as it could not reach an agreement on commission payout for distributor services.
“The postal department wants us to maintain status quo on commission charges. They sold our schemes for a few more months after August — when the entry load ban kicked in — and after that they stopped,” said the marketing head of a fund house that had distributor tie-ups with the postal department.
“The department is now asking us to pay a 2.25% commission and about 75 basis points as trail, which we will never be able to pay,” the official added.
According to a senior official in the postal directorate, it is no longer viable for the department to sell mutual funds at current brokerage rates. “Moreover, we’d just be a plain distributor. We cannot advise investors on which funds to buy. We do not want to collect advisors’ fee from the investor; we’re only interested in pure distribution,” said the senior official.
The best year for India Post with respect to revenues was 2007-08, when it logged a revenue or over Rs 16 crore selling mutual funds. In 2008-09, during recession, the department posted about Rs 4 crore as revenue.
India Post started distributing mutual funds in 2001, first by signing an exclusive tie-up with IDBI-Principal. If one goes by India Post website, the department has stationed one AMFI qualified personnel at every designated post office to sell mutual funds. But postal department officials now say they cannot “advise” investors on mutual fund investments.
Furthermore, it will be interesting as to how UTI will sell its schemes through India Post after the recent Sebi’s mandate that all (MF) sellers or advisors should clear the NISM’s fund advisors’ module certificate test to sell or advise funds to investors. The long-term impact of India Post not selling mutual funds is going to be very drastic, according to industry sources.
“India Post — though not much of a big contributor to AUMs currently — has all that it takes to be a big rural distributor in future,” said the channel head of a bank-promoted fund house.
“But we’ll not try to revive the postal route now as we are not in a position to meet even half of what they expect from us as commission and trail,” the channel head added.
Source : The economic Times
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