The country's leading mutual fund companies, Prudential ICICI, HDFC and Kotak have tied up with Mahindra & Mahindra Financial Services to distribute their products in the rural markets.
ING Vysya and UTI are also in talks with MMFSL.
The companies will initially distribute their basic mutual fund products via MMFSL and depending upon the rural market response, move towards distributing top-of-the-line products too.
Currently, 10 per cent of the total mutual funds sold in the country are in the rural markets. Lack of investment awareness among the rural public along with limited distribution network has hindered the rural penetration of mutual funds.
"MMFSL has begun distributing products for Kotak, Prudential ICICI and HDFC. We would like to sell mutual fund products on behalf of our clients in regions, where banks have limited accessibility, which is our unique selling point," said Ramesh Iyer, managing director, MMFSL. MMFSL was granted permission by the Reserve Bank of India to distribute mutual funds early 2006.
Paras Adenwala, chief investment officer at ING Vysya Mutual Fund, said, "Right now, there is lack of rural penetration due to limited distribution network of banks and non-banking financial companies. The situation is expected to improve with the entry of players like MMFSL, with their enhanced distribution chain."
MMFSL is primarily focussed on the rural markets with 305 branches. "We should be typically growing, adding more than 50 branches and 800 employees every year," said Iyer.
MMFSL was started primarily to finance M&M vehicles. However, gradually the company began financing non-Mahindra vehicles too. The vehicles sold include tractors, cars, trucks, three-wheelers, and multi-utility vehicles.
MMFSL also finances second-hand vehicles.
The company's plans include selling financial products, starting with mutual funds.
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