SEBI Proposes Small-Ticket SIPs Starting at Rs.250 to Boost Mutual Fund Reach
The Securities and Exchange Board of India (SEBI) has announced a proposal to offer monthly systematic investment plans (SIPs) with a minimum ticket size of Rs.250 as part of a move to promote financial inclusion and systemic savings. According to the initiative, described by the markets regulator as the “sachetisation” of mutual funds, this was revealed in a consultation paper released by SEBI on Wednesday.
SEBI plans to subsidize partially the costs incurred by intermediaries on these small-ticket SIPs for this initiative. However, to manage the subsidy, the number of Rs.250 SIPs per PAN card will be capped at three. The idea is to allow new investors to come into the mutual fund space and to inculcate a habit of saving in a disciplined manner and for small-scale investments.
Currently, some fund houses already offer small-ticket SIPs under specific schemes. SEBI’s proposal seeks to make this concept popular further by providing financial incentives to intermediaries, including fund houses, clearing corporations, mutual fund platforms, Know Your Customer Registration Agencies (KRAs), and Registrar and Transfer Agents (RTAs).
Details of the Proposal
Such SIPs can be offered under most mutual fund schemes, except debt schemes, sectoral and thematic schemes, as well as small-cap and mid-cap equity funds. The consultation paper emphasized that such an initiative can promote financial empowerment for the less privileged sections of society and push the fund houses to go to remote corners of the country.
This allows investors to subscribe to up to three Rs.250 SIPs, one in each of three different fund houses. Fund houses can offer more Rs.250 SIPs, but they will not receive any subsidy for those. SEBI has proposed an incentive of Rs.500 for distributors and EOPs for onboarding investors into these small-ticket SIPs. This incentive will be paid in addition to the distribution commission provided by fund houses.
The consultation paper puts forward this initiative on financial inclusion and feels it could be helpful in achieving break-even for Asset Management Companies within a span of two years. The participation rate of mutual fund schemes has grown over time, and SEBI hopes this would add yet another dimension of making mutual fund schemes available across the society with individuals from remotest of regions getting the access.
SEBI has invited public comments on the proposal till February 6, 2025, after which it will finalize its decision on implementing small-ticket SIPs. This move is expected to significantly expand the footprint of mutual funds and foster a culture of systematic investments among new and underserved investors.
