Financial literacy is vital if the mutual fund industry is to grow beyond metros and large towns and it is the industry’s responsibility to educate the investors there about the benefits of professional fund management, according to Harshendu Bindal, President, Franklin Templeton Investments (India).

Despite high savings rate, Indians tend to put their savings largely into unproductive physical assets due to poor financial education and the fund house seeks to fill this gap by organising educational programmes like 'Vazhga Valamudan’.

'Unproductive physical assets'

A release issued by the fund quoted Harshendu Bindal as saying that much of the high household savings in the country were diverted to "unproductive physical assets''.

He felt that the primary reason for this was the "lack of awareness'' about MFs and the absence of a "robust distribution network'' beyond metros and towns. He felt that financial literacy was vital if mutual funds were to extend their reach to smaller towns.

Professional fund management

He said investors in these places sought refuge in traditional investment avenues that were not adequate to meet their different financial needs. It was the responsibility of fund houses to make the investors there understand the benefits of professional fund management.

R Janakiraman, Vice President & Portfolio Manager – Franklin Equity, Franklin Templeton Investments, who was participating in a 'Vazhga Valamudan’ programme organised by the fund house at Tiruchi on Tuesday, pointed out that it was such programmes that helped take the mutual fund products beyond the top 15 cities, where the investors are concentrated at present and to cities like Tiruchi.

Stressing the role played by distributors in bringing more people into investment mode, he said that one of his fund house’s main objectives would be to "enroll a new cadre of distributors'' trained sufficiently in offering the right advice and to spread awareness about the benefits of mutual fund investments. This would also provide the intermediaries, including lawyers, CAs, and SHGs, another source of income while assisting the fund in expanding its investor base.

District adoption programme

The fund said that the event was part of its district adoption programme that had the support of the market regulator SEBI and coordinated by AMFI, which is the umbrella organisation of the mutual fund industry.

The programme aims at enhancing awareness about the investment opportunities in mutual funds in 178 districts across India adopted by different mutual fund houses for this purpose.

Three-point agenda

The programme has a three-point agenda of improving awareness through various means like advertising and activation programmes, enlarging distributors’ reach with greater engagement and by promoting mutual fund investment as an investment tool.

The fund house has planned to engage locals in Tiruchi who would be called 'MF Sevaks' for coordinating activities like holding investor camps and contact programmes even as they worked closely with national-level distributors such as banks and local independent financial advisors. The whole effort would be focused on increasing investor awareness about MFs.

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