The high-profile committee on financial inclusion, headed by the chief of the Economic Advisory Council (EAC) to the Prime Minister, feels mutual funds must pool more savings from outside the metropolises, but that may still be some time away.

An indication of this is available from figures provided by CDSL Venture Ltd (CVL), which is mandated to maintain data on know-your-client (KYC) norms of mutual funds.

Out of the five-lakh investors who filed KYC details with CVL, 45% belong to Mumbai, New Delhi, Bangalore, Chennai & Kolkata. Another 25% investors come from large cities and 20% from smaller and semi-urban areas. Though mutual funds have 4.37 crore investors, only five lakh have registered under the KYC rules.

AP Kurian, chairman of the Association of Mutual Funds in India, said, ?It?s true that the growth of mutual funds is low. We have started investor-education programmes in semi-urban areas and will take them to the rural areas, too.?

The Securities & Exchange Board of India (Sebi), which regulates mutual funds, has ruled in February that investors putting in more than Rs 50,000 in mutual fund units must provide their details under the KYC norms. Sameer Kamdar, country head of Mata Securities, a large mutual fund distributor, said rural investors traditionally invest in bank fixed deposits, insurance policies & small savings, but mutual funds are a new idea to them.

Private sector mutual funds were tightlipped about their plans to penetrate rural areas. However, Debashish Mohanty, country head, retail cell, at state-run UTI Mutual Fund, the third largest fund house in the country, said, ?We will open 300 branches in the rural and semi-urban areas by 2010. We will offer investor-education in these areas.?

While merely going by the KYC data may not fully represent the situation, since that pertains only to those who have invested more than Rs 50,000, it does, however, give some indication of the lower level of rural penetration. A committee on financial inclusion, headed by C Rangarajan, chairman of the EAC, suggested early this year that the MF network must expand beyond the metros. Mutual fund products and other financial services can be distributed through non-formal channels like non-government organisations in an effort to drive financial inclusion.