On January 22, 2025, the Securities and Exchange Board of India (Sebi) released a consultation paper seeking public feedback on its proposed Rs 250 SIP. Designed to promote systematic saving and financial inclusion, this initiative targets new investors and small savers unfamiliar with mutual fund investments.
Key Features of the Proposal
- Limited SIP Options: Investors can subscribe to up to three small-ticket SIPs, one in each of three different Asset Management Companies (AMCs).
- Discounted Rates: AMCs can offer SIPs beyond three small-ticket SIPs, but discounted rates from intermediaries will apply only to the first three.
- Aadhaar Verification: Investors can invest up to Rs 50,000 per mutual fund annually without a PAN but must use Aadhaar for verification.
Cost Management and Incentives
To reduce the break-even period for AMCs, Sebi proposes compensating part of the costs from the Investor Education and Awareness Fund. Lower transaction costs from stock exchanges, depositories, and registrars will further aid in reducing costs for AMCs.
The break-even time for small-ticket SIPs is expected to be less than two years due to these measures.
Eligibility and Restrictions
The Rs 250 SIP is tailored for first-time and small investors. Existing mutual fund investors or those making lump-sum investments will not qualify. Investments must be made under the ‘Growth option,’ with payments facilitated through NACH or UPI autopay.
Debt schemes, sectoral and thematic funds, and small- or mid-cap schemes will not be eligible to offer small-ticket SIPs.
Commitment and Flexibility
While the proposed SIP encourages a five-year commitment with 60 investments, investors retain the flexibility to stop or withdraw prematurely without penalties. Additionally, the option for fortnightly SIPs may be introduced to further lower transaction costs.
Conclusion
Sebi’s Rs 250 SIP initiative aims to make mutual fund investments accessible to new and small investors, fostering financial inclusion and systematic savings. Public feedback on this proposal is open until February 6, 2025, marking a step forward in democratizing investment opportunities in India.
