Market regulator Sebi nudges mutual funds to push bite-sized SIPs

The Securities and Exchange Board of India (Sebi) is encouraging fund houses, through their industry association, to accelerate the launch of micro systematic investment plans (SIPs), as over two-thirds of the mutual fund (MF) industry have yet to introduce them. 

According to sources, following a nudge from Sebi, the Association of Mutual Funds in India (Amfi) wrote to fund houses on June 27, seeking information on their plans to offer the ₹250 SIPs. Announced in February, the so-called Chhoti SIP initiative is aimed at enhancing the financialisation of savings. 

In a consultation paper in January, the regulator proposed cost subsidies for fund houses to make it feasible for them to accept small-ticket investments. The regulator also intended to allow the use of the investor education corpus to cover certain expenditures. 

Interestingly, nearly six months after the proposals, the final circular from Sebi is still awaited, causing some confusion among market participants. 

Almost all large fund houses (top 15 by assets managed) have recently lowered the minimum SIP ticket size to as low as ₹100.SIPs of any amount other than ₹250 do not fall under the proposed bite-sized SIP framework. 

“The ₹250 amount was carefully picked, as it is the most viable amount. This was finalised after considering cost components and discussions with stakeholders. This SIP would need to fit into the scheme of operations of the fund houses, and they will have to do the legwork to make it reach the masses,” said a source privy to the developments.  ALSO READ: MobiKwik's subsidiary receives Sebi approval to act as stock broker 

Emailed queries sent to Sebi and Amfi remained unanswered until the time of going to press.

 

D P Singh, deputy managing director and joint chief executive officer of the country’s largest fund house, SBI MF, said they have witnessed over 100,000 low-ticket SIP registrations under the JanNivesh SIP plan. “As industry leaders and market makers, we are not concerned about economic viability. There is a lot of potential, and it is a noble cause to bring more people into the fold to benefit from economic growth and capital markets,” he said. 

“The idea is to bring more investors into the MF fold. Initially, we may incur costs, but over time, these will be more than recovered as their investments grow,” said an executive from another large fund house. 

However, since the initiative is voluntary, there has been low interest from midsized and smaller fund houses, which tend to be more cost-sensitive. 

“There are commercial viability issues and hence, its part of our strategy currently,” an MF executive said.

 

According to Sebi’s calculations, ₹250 SIPs will break even for fund houses within two years, with subsidised onboarding, know-your-customer, payment gateway, and other related costs. However, there are technical complexities. Sources in asset management companies (AMCs) that have not yet lowered the ticket sizes say the rigid conditions around identifying eligible investors are a hurdle. 

According to the consultation paper, the reduced rates will apply only to the first three ₹250 SIP registrations by an investor. MF executives say this is difficult to implement during investor onboarding. The cost benefits may not be available to asset management companies if the SIP ticket size is other than ₹250. However, following Amfi’s queries, most fu­nd houses have started reconsidering the option. 

Small size, big plan

 

Amfi announced Chhoti SIP in February 2025, a month after a Sebi consultation paper on it

 

The offering is aimed at increasing MF penetration

 

Initiative sees mixed interest; while large players are now offering bite-sized SIPs, most smaller players have stayed away so far

 

Amfi has written to members, seeking details on Chhoti SIP plans