NCDEX taps farmer producer groups to expand mutual fund reach in rural India

Farmer Producer Organisations (FPOs) are taking on a new role in India's financial ecosystem as distributors of mutual funds and systematic investment plans (SIPs), following the launch of NCDEX Nidhi, a mutual fund transaction platform aimed at rural and semi-urban investors.

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The National Commodity & Derivatives Exchange (NCDEX) recently launched the platform after receiving in-principle approval from the Securities and Exchange Board of India (SEBI) in December 2025. The platform currently has seven asset management companies (AMCs) on board, including HDFC AMC, Tata AMC, Nippon India Mutual Fund, Axis Mutual Fund, PGIM Mutual Fund, Aditya Birla Sun Life Mutual Fund and LIC Mutual Fund.

FPOs Become Distribution Channel

The initiative relies on FPOs' existing relationships with farmers to introduce investment products in areas where awareness of mutual funds remains low.

NCDEX has been working with farmer collectives since 2016 through commodity risk management and derivatives training programmes. According to the exchange, it engages with around 800 to 900 FPOs annually across nearly 15 states.

The exchange identified an opportunity to use these networks as a distribution channel for financial products. A single FPO with around 300 members can potentially reach more than 1,500 people when family members are included, according to NCDEX officials cited by Moneycontrol.

Training and Regulatory Hurdles

Before becoming mutual fund distributors, FPO representatives must clear the National Institute of Securities Markets (NISM) certification examination. NCDEX developed simplified bilingual training material after finding that standard study resources were difficult for first-time candidates.

Of nearly 60 FPOs that attempted the examination, around 30 have cleared it so far. About 20 FPOs have completed the process and applied for authorised distributor status, while several have already been onboarded onto the platform.

Registration costs were another obstacle. According to Moneycontrol, FPOs were initially required to pay around ₹40,000 to register as distributors because they are classified as corporate entities. After consultations involving NCDEX, the Association of Mutual Funds in India (AMFI) created a separate category for FPOs and reduced the fee to ₹10,000.

Focus On Awareness And Small Investors

The programme is currently concentrated in Madhya Pradesh, Rajasthan, Gujarat and Maharashtra, with training activities expanding into Chhattisgarh and Uttar Pradesh.

The main challenge remains awareness rather than technology, according to the report. Many farmers continue to favour fixed deposits, while younger investors have shown greater interest in market-linked products. FPOs plan to conduct village-level workshops to explain mutual funds and SIPs through local outreach rather than digital marketing campaigns.

LIC Mutual Fund said the model could help bridge the gap between rural communities and formal financial markets by using trusted local networks and simple investment products designed for first-time investors.

Next Phase

NCDEX said its immediate priority is onboarding more FPO distributors and expanding investor education efforts. The exchange has also established a dedicated helpline to support FPO representatives and plans to integrate mutual fund awareness programmes into its existing agricultural outreach initiatives.

The launch of NCDEX Nidhi marks an effort to use farmer networks to bring mutual fund products to underserved regions and broaden participation in financial markets beyond urban centres.