SEBI Proposes ₹250 SIPs in Mutual Funds for Accessibility

To broaden accessibility and encourage participation from low-income groups in mutual funds, the Securities and Exchange Board of India (SEBI) released a consultation paper on Wednesday regarding the ‘sachetisation’ of mutual funds.

In this proposal, SEBI suggests introducing a sachetized mutual fund product—a small-ticket systematic investment plan (SIP) with a minimum investment of ₹250. These small-ticket SIPs would be available across various schemes, except for debt funds, sectoral and thematic funds, as well as small-cap and mid-cap schemes within the equity category.

At present, some Asset Management Companies (AMCs) offer SIPs with lower investment amounts under certain schemes.

According to SEBI, the sachetisation of mutual funds would enable individuals to make small but regular investments, gradually strengthening financial inclusion among underserved sections of the population. This initiative would also encourage fund houses to expand their reach, including into remote areas of the country.

Providing further details, SEBI proposed that an investor be permitted to initiate up to three small-ticket SIPs—one per AMC. While AMCs can continue to offer ₹250 SIPs beyond this limit, intermediaries would only be allowed to provide discounted rates for the first three such investments.

Additionally, SEBI recommended that the mode of payment for these small-ticket SIPs be restricted to National Automated Clearing House (NACH) and Unified Payment Interface (UPI) autopay methods.

To manage Know Your Customer (KYC) expenses, the cost incurred for small-ticket SIPs could be covered through a fund collected by AMCs, with a charge of 1 basis point (bps) imposed on mutual fund schemes for investor education and awareness.

SEBI also proposed a ₹500 incentive for distributors and Execution-Only Platforms (EOPs) promoting small-ticket SIPs. This incentive would be in addition to the distribution commission payable by AMCs to distributors.

The regulator anticipates that financial inclusion under this initiative would allow AMCs to reach a break-even point within two years.

Since 2014, the industry's Assets Under Management (AUM) have surged from ₹10 lakh crore to over ₹68 lakh crore as of November 2024. Over the same period, the number of unique mutual fund investors has increased from 1.7 crore to 5.18 crore.

Despite this steady growth in investor participation, SEBI sees significant potential to extend mutual fund accessibility across all segments of society. The goal is to ensure that every individual has the opportunity to invest in mutual funds, prompting the introduction of this proposal.

SEBI has invited public feedback on these proposals, with the consultation period open until February 6.