After months of deliberations, the mutual fund industry has latched on to the ideal of sachetisation of SIP by halving the minimum investment to ₹250 a month.
To safeguard investors interest, the chhota or small SIP initiative will initially not be allowed in thematic, small and mid-cap and debt funds.
Moreover, distributors will not be paid any incentive if an investor stops the chota SIP within two years.
Accessible to millions
Madhabi Puri Buch, Chairperson, SEBI said the initiative will democratise investing and make mutual fund investments easily accessible to millions more across the country.
Drawing the analogy from the explosive growth in sale of shampoos after its launch of the sachet, Buch said “the chota SIP is very much designed to be a long-term product and I am sure that’s how the industry will also adopt it”.
SEBI chief said unit economics should work in favour of the industry and the break-even should be achieved in 2-3 years.
Asked whether SEBI is concerned with launch of thematic funds, Buch said the root cause of the proliferation of thematic mutual fund schemes is the arbitrage between normal schemes and new fund offers.
Consultation plan
There is no reason to put a cap on the thematic schemes and to curb such proliferation, the regulator has a consultation plan approved by its board, she said.
While the board has plans to use of proliferation, the same proposal plan has not been brought to the mutual fund committee yet, said Buch.
Game-changer
Navneet Munot, Chairman, AMFI said chota SIP will be a game-changer as investors from smaller cities can participate in India growth story by setting aside just ₹8 per day, costing less than a cup of tea.
However, he said these small investors have to stay invested for longer period to reap the full benefit of wealth creation and the industry need to spread the financial literacy to retain them during wild market swing.
Venkat Chalasani, Chief Executive, AMFI said the industry aims to lower entry barriers, instil financial literacy at an early stage and provide investors with mechanisms to track and retrieve their investments, he said.
Tarun Yojana
AMFI has also launched Tarun Yojana which will integrate financial literacy into school curricula, equipping young minds with foundational knowledge of investment principles.
This apart, the industry has launched MITRA platform that enables investors and their legal heirs to identify and recover inactive or forgotten mutual fund holdings, ensuring rightful asset ownership.
