Bridging the gap: Mutual Funds go Vernacular

India is slowly but surely trying to become more inclusive. FMCG Companies and automobile manufacturers have done so in the past; it's the mutual fund industry now that is making serious moves to bridge the gap between India and Bharat.

It's simple, you can connect to a generation, speak their language, not yours. Departing from the age-old tradition of English names for investment schemes, mutual fund firms are launching plans with Hindi names so that people in rural hinterlands could easily connect with the schemes' objectives.

'KarBachatYojana', a tax saving fund, 'BalVikasYojana', a balanced scheme aimed at saving for children's future, along with 'BachatYojana' and 'NiveshLakshya', both low-risk fixed income schemes, are some of the launch schemes filed with Sebi in the last four days by Mutual fund companies like Mahindra and Reliance. The aim is undoubtedly to reach out to people outside of the metros and cities, that is, mainly the towns and villages.

"People in towns and villages do not understand anything about stocks, bonds, mutual funds, etc. So funds need to reach out to them through the language they understand," said the head of a local fund house. AshutoshBishnoi, MD, Mahindra MF, said, "We are aiming at a wider reach with such names. That's why we are selecting words in Hindi which have strong 'Sanskrit' roots."

With only about one-sixth of the Rs 13.5-lakh-crore Mutual Fund industry operating beyond the top 15 Indian cities,Bishnoi says that the mandate at Mahindra MF is to create investment products for the customers of Mahindra Finance across over 2.5 lakh villages and semi-urban areas of India. "The starting point is to speak their language. Speaking to them in English could alienate them or lead to confusion," he said. "At Mahindra Finance, it is a part of our day-to-day life to speak to our clients in their language. So naming the retail products in a vernacular language was the most natural thing to do. I don't think we even thought about naming them in English," he added.

The case is same with Reliance MF who are aiming at deeper penetration into the rural and semi-urban areas. "The effort is to reach out to people in rural areas of the country. For that, the products should be presented in a language which they understand," said SundeepSikka, president and CEO, Reliance MF. "Naming of funds in Hindi also conforms to Sebi's 'Make it Simple' initiative relating to financial products," Sikka said.

This move by fund houses comes about four years after Sebi chief U K Sinha forced the MF industry to go beyond the top 15 metros and cities (called Top-15, or T-15 in industry parlance), where about 95% of its assets were concentrated, and get more investors from areas beyond these 15 cities (Beyond-15, or B-15).