The mutual fund industry is entering a critical phase of expanding the penetration level in India’s B-30 (beyond top 30) cities, where financial inclusion remains thin, says AMFI Chief Executive Venkat Chalasani.
While investor accounts have increased from 1 crore to 5.5 crore and assets under management have grown sharply, the distribution of this growth is uneven. According to AMFI data, only 18% of total mutual fund AUM comes from B-30 locations, and even among individual investors, just 27.4% of assets originate outside the top 30 cities.
“Financial literacy in the country is still only 27%. People may be educated, but when it comes to financial independence, the awareness is very low,” Chalasani told Moneycontrol as AMFI marks its 30th anniversary.
As part of SEBI’s mandate, AMFI is running specialised financial literacy programmes in Meghalaya, Bihar, Andhra Pradesh, and Odisha. This is beyond the regular programmes that the association is doing across the country. “They are more intensive,” he says.
The initiative is designed in two tiers. At the foundation level, AMFI conducts district-level sessions in colleges and universities, introducing students to financial products and encouraging them to sit for the free NISM Level-1 test, the cost of which AMFI covers. The level one is beyond just mutual funds and is aimed to encourage financial literacy and investing through various means.
At the advanced level, those aspiring to become distributors receive guidance and support to prepare for the NISM Series V exam. The target is 10,000 participants in each state, with at least 1,000 converting into certified distributors. Chalasani added that they hope to expand beyond these state as well.
Alongside colleges and universities, AMFI is also working with India Post to take financial awareness deeper into smaller towns and rural districts, leveraging the postal network’s reach and familiarity as a trusted channel for communication.
The foundation-level sessions are financed through the Investor Education and Awareness Fund, built from a mandatory levy of two basis points on industry AUM and included in the TER (Total Expense Ratio).
AMFI uses its one-basis-point allocation from this pool to run awareness workshops and cover the free entry-level certification. The advanced distributor training, however, falls outside this mandate. AMFI finances it separately from its own pool of membership fees and ARN registration charges.
Chalasani explained that even in prosperous regions, financial penetration remains shallow. “People put their money into real estate, gold, or chit funds,” he said adding that it was a long-term process but a continuous one.
Under SEBI’s mandate, different Market Infrastructure Institutions (MIIs) including NSE, BSE, CDSL, and NSDL along with AMFI have been assigned three to four states each for literacy campaigns. AMFI, with its four states, is aligning this work with its broader mission of expanding B-30 reach.
Meanwhile, on the issue of growth of micro SIPs, Chalasani agreed that micro SIPs were yet to pick up as many funds were yet to launch the option. He, however, added that AMFI is working to expand its messaging encouraging investors to look at micro SIPs once a larger number of funds start providing the service.
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