Post Office Mutual Funds
The Indian Postal department has customarily been a mechanism of monetary services, from banking services to money orders. The Savings Bank service of Post Office is the biggest retail bank service in the nation, working from more than 1,50,000 branches. With a goal to influence the quality of the postal system and abilities Postal Department had begun bonds and mutual funds.
Saving Schemes of Post Office
Saving schemes of Post office is the most seasoned approach to contribute cash to get guaranteed return with least threat. Nowadays there are a lot of choices to invest. Numerous monetary specialists will propose you to put cash in stock, bonds, mutual funds and so on. In such a time, the saving schemes of post office has still figure out how to stay buzzing with their amazing elements, as fixed return, which provide good rate of interest contrasted with other schemes and the most essential component is the trust it has earned from years of service.
Individuals who don’t need to be entangled with the securities exchange or complex calculations of the return can go for any of the schemes which post office offers. Be that as it may, with time the saving schemes of post office have likewise changed their face and now ready to battle with all the current options of the market.
Launching of PO Mutual Fund Scheme
On January 22, 2001, Indian Postal Department in association with the IDBI Principal propelled a plan to distribute mutual funds through their branches. A pilot task was begun from the 4 cities of Mumbai, Delhi, Patna and Kolkata. There on from June 15, 2001 onwards, the plan was stretched out to cover the post offices in all the major capitals and cities all over the nation.
Problems Maintaining The Distribution of PO Mutual Funds
“India Post Department have found it hard to manage its plan of action just on trail basis after abrogation of the entry load,” said CEO of the Value Research, Dhirendra Kumar. He again included that Postal department created a better than average number of folios of AMCs. Nonetheless, because of administrative requirements and expanding instances of the wrong selling, they suspended dispersion of the MF schemes, he included.
According to a report, a larger part of the fund houses wanted to influence the countrywide system of the Post offices to disseminate their schemes of mutual fund. Postal department has 150,000 branches the nation over.
A study of SEBI demonstrated that about 68% of the fund organizations feel dissemination through post offices would expand entrance while 18% of the fund organization had an impartial perspective. Just a couple of the fund organizations are of the conclusion that such move may not be of much assistance.
On the off chance that the distribution is done through the post offices, it could become a constructive step towards expanding the dissemination of the mutual funds. In the event that this can be initiated, this will be a huge step considering the late push by the Postal Department of the saving schemes offered by the post offices. Since, Postal Department is in loss, the launching of such MF sales through the Post offices could likewise help them in decreasing their shortfall and it could be a very useful move for both sides, stated in a report of SEBI.
Numerous fund organizations are of the perspective that the countrywide system of the post offices could be utilized for the distribution of MFs. CMO, DP Singh said –SBI MF, Domestic Market trusts that it will expand the industry of the Mutual Funds. Nonetheless, D.P. Singh opined that just simple products ought to be appropriated through these systems so that an employee of post office and clients can without much of a stretch comprehend the products.
A senior fund officer from a fund organization which as of now offers its plans through the post offices feels that the network of post office will help the AMCs to grow their business in the B-15 cities without investing much cash on appropriation and advertising costs.
The prohibition on the entry load on MFs has got its initial hit to the industry of asset management, with the Postal Department halting the circulation of the MFs through its assigned branches of POs.
Postal Department of India is a ‘national distributor of MFs’ in the genuine sense, because of its far reaching dispersion channel covering more than 210 POs — has notified MFs (with which Postal Department has selective associations) that it is not going to sell MFs till there is clarity on the distribution commission.
Postal Department’s decision to halt distribution of MFs comes from the late SEBI restrictions on the entry loads in MFs. By new standards, investors at present have the liberty to specifically bargain on the fees that they are paying for the various services of brokers or distributors, during the buy of MF schemes.
Industry watchers are worried that numerous distributors might quit offering MFs due to unviable overall revenues. In spite of the fact that not formally affirmed, Bajaj Allianz, the third joint endeavor business between Allianz SE and Bajaj Finserv, is genuinely considering to close operations soon. The Pune-based distribution organization has vicinity in more than 30 regions, and has restrictive tie-ups with the fund organization, for example, Principal MF, Taurus Mutual and Fidelity MF.
By authority, Post Department has sold MFs worth rupees 150 crore in the last financial year. Rough approximations recommend that the postal department would have earned between 5 – 10 crores, including trail and upfront commissions.
At present selected schemes of Sbi, Principal, UTI, Reliance MF and Franklin Templeton are made available through the assigned post offices.
Simple steps to invest through the PO
At each assigned PO, one window/counter (AMFI qualified employee) has been reserved to get the applications of Mutual Fund. Any investor can contact the assigned counters of the post offices or the postmaster to get forms of application and info on the sorts of MF accessible through the POs. After that he/she can handover the form of application filled appropriately alongside required sum in the shape of demand draft or check to a related counter staff. The counters acknowledge the application according to the time endorsed by AMCs so submitting application on time is very important.
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