06 August, 2009

India post stops MF distribution

India Post — a 'national distributor' in the real sense, thanks to its expansive distribution channel covering over 210 post offices — has informed mutual funds (with which India Post has exclusive tie-ups) that it will not sell schemes until there is clarity on distribution commission. But the department will distribute Franklin Templeton's Build India Fund as, it will get commission as per the existing terms (referring to the earlier commission structure) and conditions for retailing the NFO.

India Post started distributing mutual funds in 2001, first by signing an exclusive tie-up with IDBI-Principal. The India Post website says the department has stationed one AMFI qualified personnel at every designated post office to sell mutual funds.India Post sells schemes of Principal MF, SBI, UTI, Franklin Templeton and Reliance Mutual Fund through designated post offices in India. 

According to the official, India Post has sold mutual fund schemes worth Rs 150 crore last fiscal. Estimates suggest that the postal behemoth would have earned anywhere between Rs 5 crore and Rs 10 crore on it, including upfront and trail commissions. 

Though not officially confirmed, Bajaj Allianz Financial Distributors, the third joint venture business between Bajaj Finserv and Allianz SE, is seriously considering to shut operations soon. The Pune-headquartered distribution company has a presence in over 30 locations, and has exclusive tie-ups with fund houses such as Fidelity MF, Principal MF and Taurus Mutual.