Fund houses target the bottom of the pyramid

Tuesday, June 30, 2009

Savita Devi, a daily wage earner in Gujarat, is saving for her future through a mutual fund. And she has company. Around 150,000 small investors are putting Rs 50-200 per month in UTI Asset Management Company’s (AMC’s) Micro Pension Plan.

UTI AMC is not the only fund house targeting the bottom-of-the-pyramid investors to extend its presence. SBI Mutual Fund, an affiliate of State Bank of India (SBI), also launched a ‘Chota Systematic Investment Plan (SIP)’ in April.

Even Reliance Mutual Fund has ‘Reliance Common Man SIP’, in which one can invest a minimum of Rs 100 per month. Sahara Mutual Fund is awaiting approval from the market regulator, the Securities and Exchange Board of India (Sebi), for a scheme that will allow the investor to put in as little as Rs 10 per day.

‘Chota SIP’ is an equity-based SIP that offers long-term investment benefits to low-income households residing in rural and semi-urban areas. This product is being marketed by SBI. All these players have definite plans to promote these schemes. SBI, for example, is not only depending on its huge network of over 15,000 branches, but is also tapping self-help groups (SHGs), NGOs and micro credit/finance institutions.

Invest India Micro Pension Services (IIMPS) and UTI’s pension plan, a government notified plan jointly promoted by Sewa Bank, UTI AMC and some private individuals, is promoting these products through puppet shows and plays. It has already tied up with thousands of rickshaw pullers and the National Association of Street Vendors. It is in talks with panchayats to promote these products.

Source: Business Standard (link opens in a new window)