SEBI Proposes Rs250 SIP for Mutual Fund Investment
Moneylife Digital Team 23 January 2025
Market regulator Securities and Exchange Board of India (SEBI) has proposed a sachetised mutual fund product—a small ticket systematic investment plan (SIP) of just Rs250. According to SEBI consultation paper, these small-ticket SIPs can be offered in any scheme except for debt schemes, sectoral and thematic schemes and small-cap and mid-cap schemes under the equity schemes category.
 
While some asset management companies (AMCs) currently offer small-ticket SIPs, SEBI’s initiative seeks to formalise and standardise this product to encourage broader adoption and participation.  
 
SEBI has proposed limiting each investor to a maximum of three Rs250 SIPs which may be spread across three AMCs. Additional small-ticket SIPs can still be offered, but the discounted rates provided by intermediaries will apply only to the first three SIPs. To ensure ease of transactions, payments for these SIPs will be restricted to national automated clearing house (NACH) and unified payment interface (UPI) autopay modes, SEBI says. 
 
To promote the scheme, the market regulator has suggested an incentive of Rs500 for distributors or execution-only platforms (EOPs) for every small-ticket SIP which will be in addition to the distribution commission payable by AMCs. 
 
Furthermore, the regulator says the know-your-customer (KYC) costs associated with small-ticket SIPs can be managed by charging one basis point (bps) to mutual fund schemes, with the funds allocated towards investor education and awareness programmes.  
 
SEBI says it believes that the sachetisation of mutual funds will encourage individuals from underserved sections of society to gradually build wealth through regular and affordable investments. This approach is expected to incentivise fund houses to expand their presence even in remote areas of the country. SEBI anticipates that the financial inclusion facilitated under this scheme will enable AMCs to achieve a break-even point within two years, the market regulator says.
 
Over the past decade, the mutual fund industry has witnessed remarkable growth, with assets under management (AUM) surging from Rs10 lakh crore in 2014 to over Rs68 lakh crore as of November 2024. The number of unique mutual fund investors has also grown significantly, from 17mn (million) crore in 2014 to 5.18mn.
 
Despite this progress, SEBI says it recognises the vast potential to further expand the reach of mutual fund products and enable every individual to access these financial instruments.  
 
The consultation paper reflects SEBI’s commitment to enhancing financial literacy and promoting investment accessibility across all sections of society.
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