Date:12/08/2004 URL: http://www.thehindubusinessline.com/2004/08/12/stories/2004081202280800.htm

Back Andhra Bank to vend SBI Mutual products

Our Bureau

Mr P.G.R. Prasad, Managing Director, SBI Mutual Fund, and Mr T.S. Narayanasami, Chairman and Managing Director, Andhra Bank (right), exchanging documents after signing an agreement in Hyderabad on Wednesday. — A. Roy Chowdhury

Hyderabad , Aug. 11

HARDENING of interest rates coupled with shrinking of traditional streams of business revenue for the banking industry have led Andhra Bank to shift its focus towards deriving more income from fee-based activities, the Chairman and Managing Director, Mr T.S. Narayanasami, said.

The bank plans to emphasise both on deposit mobilisation and distribution of financial services, he said at a press conference here on Tuesday to announce the bank's alliance with SBI Mutual Fund to distribute the latter's products.

Admitting that distribution of financial services has become intensely competitive especially since every bank was getting into third party distribution, he said well-established organisations with a sound distribution presence can leverage on their competitive strengths.

On the growing opportunities in marketing mutual fund products, Mr Narayanasami cited the recent study conducted by Morgan Stanley. The study indicated inflows into the mutual fund schemes to go up substantially and the potential size of the equity mutual fund industry to reach an estimated size of around Rs 420 lakh crore in the next 10 years.

The SBI MF Managing Director, Mr P.G.R. Prasad, said that with hardening interest rates eroding income levels, and treasury profiles under pressure, it is ideal for banks with a sizeable network to go in for cross-selling of products by taking advantage of the captive clientele and robust infrastructure.

For mutual funds companies, this cross-selling by banks with a rural presence will help address the general complaint that mutual funds focussed mostly on metros and catered to institutional investors while neglecting the semi-urban and rural areas and retail investors at large, Mr Prasad said.