SIP accounts: The 20% leak in the mutual fund bucket, shows data

Only 70-80 per cent of active systematic investment plan (SIP) accounts contribute to monthly mutual fund (MF) inflows, according to the Association of Mutual Funds in India (Amfi). This implies that roughly one in five SIP accounts is either in pause mode or suffers transaction failures each month.

 

In February 2025, 82.6 million of 101.7 million active SIP accounts contributed to the ₹26,000 crore SIP inflow.

 

An SIP account is considered inactive after three consecutive failed transactions for daily, weekly, fortnightly, or monthly plans. For other plans, two consecutive failed instalments lead to discontinuation.

 

In April 2024, the contributing SIP percentage was 73 per cent, compared to 81 per cent in February 2025.

 

SIP closures have spiked in recent months amid equity market volatility. February saw a shrinkage in the total number of SIP accounts for the second month on the trot. The total number of active SIP accounts fell by 1 million to 101.7 million in February, following a net closure of 500,000 in January.

 

However, closures in January and February were driven by different segments. Regular plan SIP accounts shrank by 800,000 in February, marking the first monthly slide in over a year. In January, the reduction came from the direct plan or do-it-yourself segment.

 

Despite the closures, the contribution from SIPs remained steady. The collection in January and February closely mirrored December’s inflows. SIP accounts brought in ₹26,400 crore in January and ₹25,999 crore in February. 

 

SIP inflows, which have shown resilience over the past three to four years, have provided key support to the equity market, particularly during periods of volatility.

 

While SIP inflows have held steady, lump sum inflows have sharply declined in recent months. Gross lump sum investments fell to around ₹33,000 crore, down from ₹44,800 crore in January and ₹50,500 crore in December 2024.

 

This decline in lump sum investments was the primary driver behind the 26 per cent month-on-month drop in net investments into equity schemes. Historically, lump sum inflows have surged during market volatility or corrections. For example, the highest monthly gross lump sum inflows were recorded in June 2024, following post-election turbulence. However, February’s trend deviated from this pattern.