The Department of Posts (DoP) is expanding its pilot projects nationwide in preparation to become a mutual fund distributor throughout its Post Office network. The initial pilot project in Maharashtra was completed successfully and is now being scaled up.
From Savings to Investments
To promote financial inclusion, the DoP and the Association of Mutual Funds in India (AMFI) signed a Memorandum of Understanding (MoU) in August 2025 to facilitate mutual fund distribution through Post Offices. Venkat N. Chalasani, Chief Executive of AMFI, mentioned that the first pilot project was conducted across Mumbai, Pune, Nagpur, and Aurangabad. A total of 320 employees were trained, and 280 participated in the mandatory National Institute of Securities Management (NISM) Certification Examination, with 135 clearing. Those who were successful will be deployed to offer mutual fund services at Post Offices.
Chalasani noted that the scaling up of this initiative will be gradual, as it takes time to train employees and ensure they are certified. This service model will allow India Post to act as a distributor, assisting customers in making mutual fund investments through its extensive postal network. Under the agreement, DoP will be registered as an AMFI mutual fund distributor, with staff tasked with selling to and servicing customers. This initiative aims to leverage India Post’s widespread presence in rural and semi-urban areas, where awareness of mutual fund investments is relatively low. It is expected to enhance mutual fund penetration in smaller towns and rural regions, according to Chalasani.
Bridging the AUM Gap
There are plans to incentivise Post Office staff, with the potential to receive a share of the ₹2,000 announced in the 2026 Budget for attracting new mutual fund investors. This incentive will be in addition to their commissions. The modalities for sharing this ₹2,000 are under consideration, and the DoP needs to determine how to distribute a portion of these incentives.
Chalasani stated that they need to train 10,000 employees nationwide to implement the mutual fund offering, with plans to start with at least 5,000-6,000 employees. They will extend this initiative to other states, with Punjab and Haryana being the next targets.
AMFI acknowledges that 80% of mutual fund assets under management (AUM) come from the top 10 cities. Though 65% of people are aware of mutual funds, only 7% or tely 5.9 crore individuals actually invest in them. There is significant potential to reach up to 50 crore people, according to Chalasani. Mutual fund penetration are currently concentrated in the top 30 cities across India.
For example, Maharashtra leads the country’s mutual fund industry, accounting for ₹80,23,379 crore, or 40.4% of India’s total AUM of ₹32,39,486 crore. It also holds a 21% share of the country’s Systematic Investment Plans, with 2,10,11,875 SIP folios. However, nearly half of the mutual funds in Mumbai are institutional. Outside of Mumbai, Pune ranks as the fourth-largest mutual fund hub. Pune has an AUM of ₹3,13,238 crore and 79,65,702 mutual fund folios. Other markets have smaller shares, with Ahmednagar at ₹45,415 crore, Nashik at ₹30,795 crore, Aurangabad at ₹17,000 crore, Kolhapur at ₹11,174 crore, and Kalyan at ₹8,017 crore. Maharashtra distribution network comprises 86,680 ARN holders and associated employees, including 10,496 in Pune.
The DoP-AMFI MoU is valid for three years, from August 22, 2025, to August 21, 2028, with provisions for renewal. AMFI is expecting a significant expansion of the MF landscape as DoP operationalises its distribution network.