We will go to small towns: Reliance Money chief

Vast experience makes Sudip Bandyopadhyay stand out in a crowd of CEOs. The Director & CEO of Reliance Money, Anil Dhirubhai Ambani Group, Bandyopadhyay has brought maturity and stability to the company with his experience.

Handling the ambitious foray of Reliance-ADA Group into the broking and distribution business, Bandyopadhyay has shown to the world how a company can win over the clients with efficient service. Reliance Money has launched a comprehensive financial portal enabling customers to carry out on-line trading and investment activities in a secure, cost-effective and convenient manner.

He is also handling the company's foray into gold coin retailing, money changing and money transfer business. In an interview with Commodity Market Associate Editor, Bandyopadhyay reveals his opinions on various aspects of the trade.

First of all congratulations for having emerged as the top brokerage house in Starcom Worldwide's India Investor Survey 2007. The study shows that you got this for cost effectiveness offered to online trading customers. What is cost effectiveness? 

Thank you. I will explain to you the cost effectiveness system vis-à-vis telecom industry. You see when mobile phone was launched in India 10 years ago outgoing was Rs 35 per call and incoming was Rs 16 a call. People used to say that don't give your mobile phone number to everyone because you will incur a huge bill as incoming is also heavily charged. Post-Christ (We call it ever since Reliance entered the telephone business) things started changing in telephone industry. The rates were slashed and things started getting better for consumers.

Today, my driver has a phone, my maid has a phone and my 12-year-old son is aspiring to have a phone. The customer base changed when pricing changed and we learnt that from telecom industry. So this is what we call as cost effectiveness.

In India, very few people invest in financial market. Is that a sign of an emerging economy? 

In India there are 330 million bank accounts. There are 30 million unique mutual fund folios. In mutual fund sector, this growth has come in the last 10 years. Today there are 5.85 million demat accounts and this figure has been more or less same for many years.

The Sensex has come from 3,000 to 17,000 but number of people in the business is not increasing. When PAN was made compulsory, another 2 million backed out who were doing illegal trading. So there is a huge scope for market expansion into areas where nobody is tapping.

I will give you an example, your parents and my parents. They were only interested in investing in Post Office and National Savings Certificate. It is only now some of them have started moving to mutual fund. That too they are doing because some of the fixed incomes are being taxed by the government. If you invest say Rs 3 lakhs in Post Office you will get Rs 5 lakh plus after six years. Now if you take inflation into account then your Rs 3 lakh is depleting. If you had invested in equity or mutual fund then your money would have grown tremendously.

But most Indians don't want to take risks because they fear that their money will be lost? 

You see from our grandfather to our father's time things didn't change till late 80s. After that till late 80s there was rapid change. Now we are part of a global market and we all have to think differently. This applies to everyone in every part of the world. The social security structure is collapsing. Everywhere in the world, the government is realising this fact. And it is the reality of the world.

There are some Communist countries like Cuba and North Korea that do give social security, isn't it? 

I will put it this way. Anything you control artificially will not last. You have to let natural forces play a part. The world has changed today and you have to face that reality. You don't have a choice and one has to track down his investments on day to day basis. There is no choice. Look at China, how they changed. I feel India should move that way.

At the end of the day, however there is no denying that there is very low penetration? 

You see the problem here is that broking companies are making lot of money in metros and mini metros. Out of 5.8 million, demat accounts in India there are only one million that are actively operating. They make enough money and therefore they don't go to other centres. None is bothered to go to C, D and E centres. If you see eastern parts of the country there is huge opportunity as there is bulk of population over there. They operate through chit funds which we call 'Cheat' funds (laughs). They end up cheating.

So why don't you go? 

We are going there. At present, we have 3,247 outlets in 727 cities and towns of India. India has 5,645 tehsils and we want to be in 5165